An Assessment of Enterprise Opportunities in Environmental ... · An Assessment of Enterprise Opportunities in Environmental Goods and Services 2 EXECUTIVE SUMMARY Introduction ^The

__________________________________________________________________________________

An Assessment of Enterprise

Opportunities in

Environmental Goods and Services

A Report to Forfás and InterTrade Ireland

__________________________________________________________________________________

August 2008

An Assessment of Enterprise Opportunities in Environmental Goods and Services

CONTENTS

EXECUTIVE SUMMARY ............................................................................................................... 2

1. CHAPTER 1: INTRODUCTION ............................................................................................. 13

2. CHAPTER 2: THE GLOBAL EGS MARKET ............................................................................. 18

3. CHAPTER 3: AN OVERVIEW OF THE EGS SECTOR IN IRELAND .............................................. 36

4. CHAPTER 4: THE EGS INDUSTRY BY SUB-SECTOR ................................................................ 50

5. CHAPTER 5: KEY DRIVERS ............................................................................................... 172

6. CHAPTER 6: INTERNATIONAL BENCHMARKS.................................................................... 187

7. CHAPTER 7: CONCLUSIONS............................................................................................. 210

LIST OF ABBREVIATIONS


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EXECUTIVE SUMMARY

Introduction

“The environmental goods and services industry consists of activities which produce goods and

services to measure, prevent, limit, minimise or correct environmental damage to water, air and

soil, as well as problems related to waste, noise and eco systems. This includes cleaner

technologies, products and services that reduce environmental risk and minimise pollution and

resource use.” 1

The Environmental Goods and Services (EGS) sector is therefore quite diverse. For the purposes

of this study includes the following sub-sectors:

o Air Pollution Control

o Cleaner Technologies and Processes

o Environmental Consultancy

o Environmental Monitoring, Instrumentation and Analysis

o Energy Management/Efficiency

o Marine Pollution Control

o Noise and Vibration Control

o Remediation and Reclamation of Land

o Renewable Energy

o Waste Management, Recovery and Recycling

o Water Supply and Wastewater Treatment

In addition, a separate assessment has been carried out of the construction sector as many of its

products, such as heat pumps, lighting, insulation and building materials, could be categorised as

environmental products.

The sector has expanded significantly in recent years, largely driven by more robust compliance

with EU environmental legislation. However, the focus is now beginning to change as rising

energy prices, growing awareness of the consequences of climate change, and increased

demand for greener and more environmentally sustainable goods and services are having, and

are likely to have, an increasingly important influence on the sector going forward.

Against this background, Forfás and InterTrade Ireland commissioned this study to assess the

business opportunities which are likely to arise in coming years and to ensure that enterprises

on the island and the State development agencies are well placed to take advantage of these

opportunities.

This study examines the current state of the EGS sector in Ireland/Northern Ireland, both in

terms of its structure and dynamics, and assesses the strengths and weaknesses of the sector. In

1 The Global Environmental Goods and Services Industries, Graham Vickery & Maria Iarrera, OECD, 1996.


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addition, it seeks to identify and analyse a number of promising areas in the EGS sector where

new domestic and export opportunities are likely to occur. The study also highlights priority

areas that may attract FDI.

A key finding - based on an assessment of the considerable evidence gathering during the course

of this study - is that a strategic policy framework should be put in place to ensure that Irish

companies, or companies choosing to base their activities in Ireland, can take advantage of the

growth in demand for EGS which is expected in coming years.

The Global EGS Market

It is estimated that the value of the EGS sector was in excess of $600 billion worldwide in 2005

and is likely to exceed $700 billion by 2010 and $800 billion by 2015.2 This is triple the size of

the global aerospace industry.3

Firms in OECD countries are estimated to account for about 90% of the global EGS market.

However, this situation is now beginning to change and many transition and developing

countries, in particular China and India, are now seeing strong economic growth, in response to

concerted environmental problems, including air and water quality, arising from their rapid

industrialisation and urbanisation.

In the developed world, compliance with environmental rules continues to drive investment, in

particular in the areas of energy efficiency and renewables. Overarching all this at a global level

is the ‘decarbonisation’ of society where the twin threats of oil and gas depletion and

responding to climate change act as the biggest single driver in the sub-sectors of energy

efficiency and renewable energy. Indeed, a recent report from the UK Commission on

Environmental Markets and Economic Performance highlighted the fact that the market for new

low-carbon energy technologies is now estimated to have reached $100 billion per year.

Investment in the EGS sector worldwide has also increased dramatically in recent years. Venture

capital investment in the area of clean technology is now overtaking investment in areas

considered core destinations for this capital. For example, in 2006, clean technology became the

third largest venture capital investment category in North America, trailing only IT and

biotechnology.

At a global and regional level, the sub-sectors which are considered to have the strongest

growth potential are clean technologies and renewable energy technology. Dwindling sources

and availability of potable water throughout the world are also proving to be a factor aiding the

development of the water/wastewater sub-sector.

As the global EGS market is dynamic, this provides an opportunity for IDA Ireland and Invest

2 ENDS Directory 2008, U.K. CEED Global Market Estimate. 3 UK Commission on Environmental Markets and Economic Performance (BERR/DEFRA Report, November 2007).


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Northern Ireland to target some of the international EGS players that are identified in the study.

The EGS Sector in Ireland/Northern Ireland

While few published statistics are available, industry estimates at sub-sector level would suggest

that the value of the EGS sector is in the region of €4.3 to €5.2 billion, with Northern Ireland

accounting for nearly €1billion.

Some parts of the sector - waste, water, renewables and environmental consultancy for example

- have seen rapid growth in recent years largely driven by public capital investment and the

compliance burden resulting from the national implementation of EU legislation. The growth in

the sector overall has also coincided with increased public awareness of the threats to our

physical environment and the potential risks to human health that can arise from this.

With the exception of a small number of major players, the EGS market is dominated by SMEs

who have established a substantial business presence over the past ten years. This trend has

been associated with the significant increase in public investment in environmental services and

infrastructure. It is important to note, however, that key sectors such as renewables,

environmental consultancy and waste and water are dominated by subsidiaries of UK and EU

parent companies which may affect the export opportunities available to these Irish operations.

To a very large extent, with a few notable exceptions, the EGS sector is playing catch-up with the

technologies in greatest demand (RES-E and waste management) that are deployed and

exploited by European companies of scale. This has implications for the prospect of an EGS

company breaking in to the market for PV (solar technology), for example, without the setting

up of a joint venture with an existing manufacturer.

At the same time, however, many EGS markets are starting from a low base of activity so it

should be possible to gain market share in niche areas.

While it is difficult to provide an accurate figure, it is estimated that the level of investment that

may be needed by 2020 if Ireland is to meet its legal obligations on foot of EU Directives on the

environment, RES-E and energy efficiency is in the region of €38 billion.

SWOT

The strengths, weaknesses, opportunities and threats of the EGS sector were determined taking

account of stakeholder feedback and EGS related research and can be summarised as:

Strengths

Opportunities

• Large public sector investment • Government commitment to use fiscal and

other incentives

• Rapidly growing global market • Potential emerging markets in Eastern and

Central Europe


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• Commitment to regulatory enforcement • Open economy facilitates imported know-

how • Access to natural energy sources • Vibrant domestic economy and rising

population • Good project engineering capacity in Ireland • Clear government policy in RES and energy

efficiency • All Island energy market • Strong exchequer position • State agency adaptability (strong experience

in FDI) • EPA (absent in NI)

• Business opportunity generated though public procurement

• North/south alignment on infrastructure investment which could support EGS

• Adjacency to growing GB EGS market • Regulatory compliance • Transition to carbon neutral economy • WRAP and Carbon Trust models could drive

innovation • Benchmarks could offer best practice

examples • Growing environmental awareness in public

and business • Potential synergies between sectors (e.g.

ICT and sensors)

Weaknesses

Threats

Low starting base (playing ‘catch up’)

Lack of government policy to support EGS sector

Weak EGS R&D

Poor commercialisation of R&D

Poor knowledge base

Reliance on traditional goods and services

Risk averse public procurement which embeds old technology

Poor spatial planning with diffuse pollution sources

Lack of scale and fragmented market (lack of networks)

Diffuse state support to EGS sector

Lack of investor interest

Lack of standards/verification in EGS sector

Lack of identity for EGS sector

Lack of FDI presence

Difficulties due to two jurisdictions

Low history of innovation in EGS sector

Distance from point of service to markets.

Rising energy and raw material costs

Security of supply of energy and raw materials

Climate change

Cost of not meeting RES targets

Non compliance costs

Lack of government driver

Infrastructural investment

Weak buy in from enterprise sector regarding climate change

Conflicts of interest between regulator and regulated sectors

Opportunities

The cost compliance burden resulting from the implementation of EU environmental Directives

is high and will get higher. For example, the European Commission estimates that the cost of

the EU’s climate change/renewable policy package could be €60 billion EU-wide. A compliance

burden of this scale has already had a significant impact on investors’ decisions and on the

timing of investments.

On the other side of the equation, the need to respect environmental rules and greater

corporate awareness about sustainable development – both largely driven by consumer

behaviour – is rapidly changing the way certain sectors are conducting their commerce, in

particular as regards sustainability requirements being pushed onto suppliers.


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While all EGS sub-sectors have prospects, state resources are limited so therefore priorities have

to be set. This does not mean that any sub-sector should be ignored by the state agencies.

Rather a higher priority should be given to a limited number of niche areas within sub-sectors

that have the greatest potential to make a breakthrough into what is a very competitive

European market.

In this regard, the following criteria were used in assessing the EGS goods and services with the

greatest potential:

a. Clear demonstration of growth prospects in European markets

b. Companies in the sub-sectors have the scale to export into European markets

c. Exploitation of natural resources or technical experience is achievable

d. Clear regulatory drivers exist with high levels of enforcement

e. Emerging technologies and product development are attracting VC investments

Key Drivers

The key drivers identified are as follows:

EU environmental policy frameworks (e.g. Integrated Product Policy including REACH, WEEE,

RoHS, Energy use Products Directives and Regulations) and compliance with environmental

legislation. Regulation has driven growth in most sectors in the market. Early adoption of

legislation can create an advantage over other Member States. Strong enforcement and

consistent application across different local authorities is a key requirement. Ireland/Northern

Ireland could also go beyond the minimum requirements of EU Directives to gain first mover

advantage (e.g. plastic bags, smoking ban, light bulb ban etc.)

Having a clear policy with long-term supports (targets, tariffs etc.) creates the stable framework

for growth and development.

Research and development is fundamental in the identification and widespread application of

new/improved technologies. R&D should not only focus on new, innovative technology

development but innovative ways to ensure greater uptake.

Rising energy costs is encouraging companies to consider energy efficiency initiatives and is

creating an explosion of opportunity in the RES sector.

The public sector can lead by example through implementation of green procurement and

specifying environmental criteria in public tenders. This can hugely increase the market for EGS

and the spin offs through the whole product chain can be exponential.

Companies need support through the development phase of long lead-in technologies to ensure

success which leads to long-term growth. Economic and information based supports need to be

greatly intensified and more focused on EGS. There needs to be a greater coordination of agency


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support.

Assessment of Enterprise Opportunities

Following the SWOT analysis and a general consideration of opportunities and key drivers, an

assessment, as follows, was made of the growth prospects and sectoral capabilities and capacity of

the sub-sectors with the highest potential.


Assessment of Enterprise Opportunities by Sub-Sector Sub-sector Current size of Irish

market4

€million

Growth

Potential -

Island

Current

Sectoral

capability/

capacity

Export

Potential

Main Driver Main Barrier Comment

Construction N/A HIGH LOW HIGH Higher energy

efficiency

standards

Very limited indigenous

capacity to provide required

technologies, processes and

construction products

Distinction between new build and retrofitting.

Unless indigenous manufacture develops,

imports will dominate in the short term. Long

term export potential is high because

improving building energy efficiency will be a

common EU requirement. However this will

require concerted efforts to develop domestic

capacity.

Air Pollution 4-55 LOW LOW LOW Air quality and

odour regulations.

No demand There may be scope for odour control in waste

water treatment plants.

Clean

Technology

350-700 HIGH MEDIUM/L

OW

MEDIUM/

HIGH

Energy and

material costs

Knowledge and skills deficits This is a cross sectoral category

Consultancy 60 – 75 (island)6 MEDIUM HIGH LOW/MED

IUM

Regulatory

compliance

Fragmentation and ownership

structure

There is a lack of information and support

regarding EGS opportunities; smaller

companies do not have the capacity/inclination

to pursue work abroad

Monitoring N/A MEDIUM MEDIUM/

HIGH

MEDIUM/

HIGH

Water Framework

Directive

Insufficient commercialisation

of research

Dominated by aquatic monitoring; strong

research base apparent

Energy

Management

20 HIGH MEDIUM MEDIUM Energy costs Asset rating emphasis (not

operating performance)

Current demand is low due to poor awareness

but rising energy costs will change this. Irish

companies are operating successfully in UK

market

Marine 3 - 5 (island)7 LOW LOW/MEDI LOW Regulatory Lack of scale

4 No data for NI apart from population pro-rata calculation from DTI report. 5 Industry estimate.

6 Industry estimate

7 Industry estimate


9

UM compliance

Noise N/A LOW LOW LOW Noise Directive Lack of skills

Remediation 46 – 58 (island)8 LOW LOW LOW Risk mitigation Lack of scale EU Soil Directive will shift focus to treat soil as

an asset

RES 600 - 7009 HIGH LOW HIGH EU RES targets Lack of first mover advantage Low capacity relative to competitors; Strong

niche capacity in NI; Wave, tidal have greatest

potential

Waste 1,200 – 1,60010 HIGH MEDIUM LOW Regulatory

compliance

Lack of clear government policy There is greater potential for higher value

recyclables; achieving economies of scale is a

critical success factor; the level of

infrastructural investment committed should

support new environmental technologies

Water >2,00011 HIGH MEDIUM HIGH Regulatory

compliance

Under investment in new

technologies

Very significant commitment in NDP should be

used to leverage capacity to deploy new

technologies

Total 4,280-5,160 –

8 Industry estimate 9 Consultant’s estimate

10 Industry estimate

11 DEHLG Water Services Investment Programme 2007 – 2009 capital costs only


International Benchmarks: Lessons and Best Practice

The study examined the EGS sector in a number of diverse markets - Austria, US and UK. The

analysis concentrated on a number of factors including market mechanisms, domestic

regulations and key sub-sectors. Each of these markets possesses characteristics that,

individually or collectively, provide Ireland and Northern Ireland with key pointers to the

successful development of the EGS sector.

As regards market focus, the contrast between the US and Austria is particularly evident; the US

has established a system of supports and enablers that has resulted in a rapid inflow of capital

providing a huge impetus to the renewable energy sub-sector; whereas in Austria renewable

energy forms part of an integrated Master Plan across a number of EGS sub-sectors. The UK has

again adopted a more broad-based strategic approach, avoiding the ‘picking of winners’.

Common to all three markets, and a recurring comment in discussions with industry sources, is

the need for a regulatory environment that provides clear, consistent and long-term signals.

The lead-time behind commercialisation of some of EGS technologies and the capital

construction costs require a long-term approach to attract capital. These serve to act as a spur to

domestic markets and, building on that knowledge position, countries like Austria have become

very export focused (65% of EGS sector is now exported). In the US, the scale of the domestic

market and availability of capital has allowed US EGS companies to focus internally; for example,

on the S&P global eco index there are a number of US companies listed whose operations are

exclusively domestic.

The UK’s Commission on Environmental Markets and Economic Performance recommended:

o Setting credible goals and targets that give business clear signals about the future direction

of environmental policies.

o Favouring market mechanisms to ensure that businesses have greater flexibility to achieve

environmental objectives in the most cost effective ways.

o Avoiding prescribing particular solutions to achieve the desired outcome, and allowing for

the development of innovative, new solutions in policy formation and appraisal.

o Establishing a ‘level playing field’ through the removal of regulatory and institutional barriers

that generally favour incumbent technologies.

As this report has been accepted by the UK government, some of its key findings may have

an all-island application.

For Ireland and Northern Ireland, the messages emerging are clear; allied to implementation of

EU environmental and energy Directives, set an ambitious strategic policy framework that will

stimulate the development of the EGS as enterprises will respond to the rigorous

implementation of legislation in areas such as water quality, energy efficiency, renewable energy

etc.


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Key Findings and Conclusions

The report provides clear evidence that for some EGS sub-sectors (renewables, clean

technologies, water and environmental consultancy for instance) the domestic and export

markets are dynamic and growing.

The principal drivers that are influencing investment and economic activity have been analysed

and the barriers that could inhibit the further development of the sector have been identified.

Many examples of best international, and indeed national, practice at company and government

level have been highlighted.

Ireland and Northern Ireland must plan now for a transition to a low carbon, resource-efficient

economy in response to the global challenge of climate change and sustainable development.

There will inevitably be winners and losers. However, it is also clear there are significant new

business opportunities for EGS companies in the domestic, UK and some European and

international markets as the enterprise sector at global level is seeking to improve its

environmental performance.

The EGS sector needs an identity like ‘ICT’ and ‘Life Science’. With few exceptions, companies

within the sector are not networked at sub-sector level either with each other or with key

enablers such as third level institutions. This is a major barrier to the development of the sector.

Finally, the following points are emphasised:

o Enterprise policy in Ireland has traditionally focused on maximising export potential rather

than on fostering the domestic market. The evidence in this report suggests that agency

support (and the setting of a clear strategic policy framework for the EGS sector) is needed

to facilitate the growth of both domestic sales and export opportunities.

o Regulatory compliance was found to be a major driver of growth within the EGS sector and

the need for clear and consistent environmental policy and regulation was strongly

articulated by industry representatives. However, there is no suggestion that any additional

regulatory burden should be placed on a sector that is already facing competitive pressures.

What is needed is not more regulation, but clearer and more consistent regulation. What

the report suggests, therefore, is that a fresh look needs to be taken at the business

opportunities arising from the consistent implementation of existing EU Directives and

related measures.

o With notable exceptions, the EGS sector is playing catch-up. In this context, while many

potential new business opportunities have been identified, companies themselves will

determine if the cost competitive conditions are sufficiently favourable to invest in

expanding their business. What the report seeks to do, therefore, is to identify the optimum


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strategic framework conditions which, if present, would encourage companies to innovate

and expand their operations.

o While the EGS sector is most aware of its “green and clean” image, this raises the much

wider issue of the greening of manufacturing industry and internationally traded services,

for example through the introduction of industry guidelines. A further study about this

branding initiative could be undertaken.

o Many of the sub-sector business opportunities (pollution control and monitoring, clean

technologies and processes, and RES-E and energy efficiency) will be based on the use of ICT,

where Ireland/Northern Ireland have particular competitive advantages.

o It is beyond the terms of reference of this study to identify, for example, the capabilities of

individual firms in the EGS market place or to identify product specific goods and services

that have the greatest potential. This is a strategic study, not a market research report.

o In carrying out this research significant statistical and data gaps have been identified. This is

largely due to the unavailability at the present time of sufficiently detailed official statistics

and therefore, it is not possible to provide key economic and financial data for the majority

of sub-sectors.


1. CHAPTER 1: INTRODUCTION

1.1. Background

The Irish environmental goods and services (EGS) sector is an extremely diverse and wide

ranging sector encompassing industries such as waste management, water treatment,

energy management and renewable energy, land remediation, noise pollution control, clean

technology and environmental monitoring.

Some parts of the sector - waste, water, renewables and environmental consultancy for

example - have seen rapid growth in recent years largely driven by public capital investment

and the compliance burden resulting from the national implementation of EU legislation.

The growth in the sector overall has also coincided with increased public awareness of the

threats to our physical environment and the potential risks to human health that can arise

from this.

However, the focus is now beginning to change as rising energy prices; growing awareness

of the consequences of climate change; and increased demand for greener and more

environmentally sustainable goods and services are having, and are likely to have, an

increasingly important influence on the sector going forward.

While it is recognised that compliance with EU legislation has added to the costs of

businesses, it is also important that the business community recognises and responds to the

business opportunities that this compliance burden can create.

Against this background, Forfás and InterTrade Ireland commissioned this study to assess

the business opportunities which are likely to arise in coming years and to ensure that

enterprises on the island and State development agencies are well placed to take advantage

of these opportunities.

This study therefore aims to examine the current state of the EGS sector in Ireland/Northern

Ireland, both in terms of its structure and dynamics, and to assess the strengths and

weaknesses of the sector. In addition, the study also aims to identify and analyse a number

of promising areas in the EGS sector where new domestic and export opportunities are likely

to occur and to consider the range of support measures that could be adopted to ensure

that Irish companies, or companies choosing to base their activities in Ireland, can take

advantage of the growth in demand for EGS which is expected in coming years.

Specifically, and in accordance with the project’s Terms of Reference, the study seeks:

a) To estimate broadly the size of the EGS sector on the island of Ireland;

b) To examine, for the all-Island market, the market drivers, and the strengths and

weaknesses of each sub-sector;


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c) To identify systematically the most promising areas in the EGS sector where new

opportunities are likely to occur - including indigenous, exports, foreign domestic

investment and all-island collaboration - as a result of forthcoming market stimuli;

d) To identify key supports and framework conditions required and desirable to assist EGS

companies including the potential to increase communication and collaboration within

the sector and between firms and research institutes.

It was agreed in consultation with the Steering Committee that the study would focus on the

following sub-sectors

Air Pollution Control

Cleaner Technologies and Processes

Environmental Consultancy

Environmental Monitoring, Instrumentation and Analysis

Energy Management/Efficiency

Marine Pollution Control

Noise and Vibration Control

Remediation and Reclamation of Land

Renewable Energy

Waste Management, Recovery and Recycling

Water Supply and Wastewater Treatment

In addition, it was decided that a separate assessment would also be carried out of the

construction sector as many of its products, such as heat pumps, lighting, insulation and

building materials, could be categorised as environmental products.

1.2. Approach and Methodology

1.2.1. Introduction

This section sets out the approach and the key steps that were involved in undertaking this

project. This approach was agreed as part of an Inception Report concluded at the outset of

the assignment with Forfás and InterTrade Ireland.

1.2.2. Data Gathering / Review of Previous Research and Reports

The first phase of the project involved data gathering and the development of a thorough

understanding of the structure of the EGS sector in Ireland/Northern Ireland, as well as an

understanding of the changing policy context at both national and EU level.

This included for example, a review of existing information held by Enterprise Ireland, IDA

Ireland, industry associations, Invest Northern Ireland, the EPA, SEI etc. In addition, the


15

consultants also reviewed a wide range of European and international documentation and

reports on the sector, including reports produced by the European Commission (DG

Environment), UK Government Departments, as well as the research conducted by the

OECD. Previous studies on the EGS sector in Ireland such as those commissioned by the EPA

relating to research and the barriers to environmental technologies and how to overcome

them were also considered.12

A key part of the review of the existing situation was a data mining exercise to extract

market statistics, key trends and to begin to develop a profile of the structure and dynamics

of each of the sub-sectors.

The objective of this initial phase of work was to build a picture of the nature and scale of

each of the categories of goods and services covered by the EGS sector; the structure and

dynamics of each of these sub-sectors; the key drivers of demand, including economic and

policy drivers, and the key players currently involved in the sector.

This phase of the work was completed in May 2008.

1.2.3. International Developments and International Benchmarking

This phase of the project involved a review of global market developments to gain a

thorough understanding of how the sector has grown, and is likely to grow in coming years;

the structure and dynamics of the sector internationally; the key “players” on the world

stage; as well as an assessment of how the sector has developed and, more importantly, is

expected to develop in coming years. To this end a desk top review of the literature about

global developments in the sector was completed.

From this global perspective, we identified a number of benchmarks to gain an insight into

how the EGS industry has developed; the policy context or strategic approach that is driving

the development of the EGS sector; the support structures and measures that are in place to

facilitate the growth of industry; and evidence of clustering, networking or linkages with

research institutes. The US and Austria were selected as benchmark countries and company

case histories were also examined where these demonstrated key learning points. It was

agreed that the USA and Austria would provide valuable insight as they highlight the

differing approaches being taken to the development of the EGS sector. This is very much

market driven and technology focused in the US, whilst in Austria, the Government has

taken a more central role in providing clear and consistent policy messages, providing

support structures and comprehensive planning. In addition, the situation in the UK was

also considered in detail as regards the strategic approach which the UK Government is

taking to the sector and its development. This was considered important given the all-island

12For example, Kelly, D., and Ryan, J. (CIRCA Group Europe Ltd) Environmental Technologies: Guidelines on How to Take a Pilot Project to Market (2005-ET-DS-25-M3) Final Report, Environmental Protection Agency, Wexford, 2007 and Coakley, Tadhg et al. (Clean Technology Centre) Investigation into why existing environmental technologies are underused (2005-ET-DS-19-M3) Final Report, Environmental Protection Agency, Wexford, 2007.


16

dimension to the present study and in view of the importance of the UK as a major market

for Irish companies. Finally, the Commission’s Lead Market Initiative for Europe was

assessed as it covers some of the sub-sectors covered by the report.13

The Consultants also attended two international conferences highlighting the emerging

opportunities and outlook for the EGS sector across Europe. 14

The aim of this phase of the project was to identify key learning points to inform an

understanding of the sector and its potential development and to guide the assessment of

how the high growth segments of the EGS sector should be positioning themselves from a

strategic perspective to enable businesses compete on a global and competitive market.

1.2.4. Stakeholder Consultation

This was a key phase of the project and involved extensive consultation at the outset with

key stakeholders – all the State agencies and Departments representatives on the Project

Steering Group - to clarify what they expected to gain from the study and to “double check”

our understanding of the dynamics of each of the sub-sectors and to identify the problems

and issues being faced by those in the industry from the government perspective. In

addition to a number of industry trade associations, the Consultants also interviewed over

30 companies across all sectors of the EGS industry on the basis of a questionnaire approved

by the Forfás and InterTrade Ireland Steering Group.

The Consultants and the Steering Group that managed the project also met with a

consultative group from industry to get their insights into sector developments.

Meetings were held with WRAP, the Carbon Trust, the National Industrial Symbiosis

Programme, and the UK’s Department of Trade and Industry to get a fuller understanding of

the market in Northern Ireland and to ascertain if there were any lessons applicable to the

rest of Ireland and to gain an understanding of potential models for the development of the

EGS sector in Ireland.

The Irish Venture Capital Association was also consulted in relation to the financing of start-

up and developing companies in the EGS sector. A cross-section of environmental research

units at Irish universities and Institutes of Technology were consulted to establish the range

of EGS related research activities currently taking place in the sector.

Finally, the Consultants’ research findings (and conclusions) for each of the sub-sectors were

peer reviewed by a senior executive active in the sector in question.

13

www.ec.europa.eu/enterprise/leadmarket/ 14 The European Business Summit held on 21/22 February in Brussels on ‘Greening The Economy’, and Envietech, an international conference and exhibition sponsored by ETAP on environmental technologies and renewable energy.

http://www.ec.europa.eu/enterprise/leadmarket/


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1.2.5. SWOT Analysis

After the existing situation in Ireland/Northern Ireland was reviewed in some detail and

having consulted with key industry stakeholders to assess potential areas of growth and the

key drivers of demand and, having examined a number of comparator countries/markets, an

analysis of the Strengths, Weaknesses, Opportunities and Threats that face the EGS sector

was carried out.

1.2.6. Forfás and InterTrade Ireland Steering Group

The consultants met with the Forfás Steering Group on many occasions during the course of

the assignment and presented preliminary draft material on a regular basis.


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2. CHAPTER 2: THE GLOBAL EGS MARKET

2.1. Introduction

This chapter provides an overview of the EGS sector and identifies key trends globally. It

outlines the range of products and services that are encompassed by the sector and

provides an insight into key trends and the sector dynamics.

2.2. Defining the Sector

The EGS sector encompasses a wide range of activities, and definitions of the sector can, and

do, differ from study to study. For example, the US Department of Commerce for example,

defines the EGS market, or more generally the 'environmental technology' market, as those

environmental technologies that "advance sustainable development by reducing risk,

enhancing cost-effectiveness, improving process efficiency, and creating products and

processes that are environmentally beneficial or benign”.15

The European Commission has adopted the OECD/Eurostat definition which states that:

“The environmental goods and services industry consists of activities which produce goods

and services to measure, prevent, limit, minimise or correct environmental damage to water,

air and soil, as well as problems related to waste, noise and eco systems. This includes

cleaner technologies, products and services that reduce environmental risk and minimise

pollution and resource use.” 16

For the purposes of this review, as similar terms of reference were used, and in light of the

all-island nature of the study, it was decided to start with the approach to market definition

used in the UK study commissioned by the UK Department of Fisheries and Rural Affairs. 17

As highlighted in that report, environmental goods and services concern the management

and protection of natural resources. In the past, environmental firms were largely

established to help industry meet the requirements of environmental regulations or

opportunities that arose from sector deregulation. However, with the drive towards

cleaner, greener processes and products and increased focus on energy management and

the development of alternative energy sources, the scope of the sector has widened

considerably.

Therefore, “this is a cross-cutting and emerging sector which includes both companies that

have been created specifically to serve this market and companies sitting in more

15 US Department of Commerce, www.bis.doc.gov 16

The Global Environmental Goods and Services Industries, Graham Vickery & Maria Iarrera, OECD, 1996. 17 Emerging Markets in the Environmental Industries Sector, Report for the UK Department for the Environment, Food and Rural Affairs (DEFRA), by UK CEED, November 2006.

http://www.bis.doc.gov/


19

traditionally defined sectors (such as engineering) that are diversifying in response to this

opportunity. There is no exact boundary around the sector. While some companies (e.g.

environmental consultancy) will readily identify with an environmental industry sector,

others may not see themselves as operating within this sector. The key point is that there is a

sector with common issues arising from the nature of the market it is serving”.18

The DEFRA report identified twelve sub-sectors or categories which broadly correspond to

the sub-sectors that are covered by the terms of reference of this study. A brief summary of

each category is provided:

Air Pollution Control

These are defined as products, systems and services for the prevention, reduction and

removal of gaseous and particulate pollutants from air. Examples include external and

internal emission and odour control, filters and catalytic converters and treatment

systems. This sub-sector may also include Environmental Monitoring, Instrumentation

and Analysis activities specific to this sector.

Cleaner Technologies and Processes

These are defined as products, systems and services which, by design: use resources

from more sustainable sources; transform resources to deliver same functions with less

resources; transform resources with less waste; and transform resources with waste

designed to be recycled effectively.

Environmental Consultancy

These are defined as services to provide assessment and advice relating to

environmental issues. Examples include environmental audits, environmental

management systems and training, life cycle assessment, environmental impact

assessment, advice on bio-diversity, environmental regulations and corporate

environmental responsibility. This sub-sector covers consultants providing advice in two

or more sub-sectors or specialists not covered elsewhere.

Environmental Monitoring, Instrumentation and Analysis

These are defined as products, systems and services for measuring and monitoring

environmental parameters. Examples include water, air and soil quality, meteorological

conditions and flow rates, including on site and laboratory analysis. This sub-sector

includes specialist activities not covered in other sub-sectors, such as air and noise

pollution, radiological monitoring, land remediation.

Energy Management/Efficiency

These are defined as products, systems and services for energy management and energy

efficiency. Examples include energy consultancy/audits, building energy management

systems, energy efficient products and efficiency advice. This sub-sector also includes

Environmental Monitoring, Instrumentation and Analysis activities specific to this sector.

18 Ibid


20

Marine Pollution Control

These are defined as products, systems or services for controlling, clean up and

minimising marine pollution. Examples include products such as oil absorbents and

booms; and services such as marine pollution prevention training, monitoring and clean

up services.

Noise and Vibration Control

These are defined as products, systems and services for monitoring and reducing noise

and vibration. Examples include noise meters, monitoring systems, acoustic buffers,

enclosures and barriers and silencers. This sub-sector may also include Environmental

Monitoring, Instrumentation and Analysis activities specific to this sector.

Remediation and Reclamation of Land

These are defined as products, systems and services for the identification, assessment

and remediation/reclamation of land and buildings, including prevention of contaminant

dispersal. Examples include adsorbents and injection equipment, monitoring systems

and proprietary treatment processes, and sampling/analysis and site investigation/

engineering.

Renewable Energy

These are defined as products, systems and services for the generation and collection of

energy from renewable sources such as biomass/bio fuels, solar, photovoltaic, wind,

hydro, tidal and geothermal sources. Examples include the manufacture of equipment,

design, construction, installation, management and operation of renewable energy

facilities, including microgeneration.

Waste Management, Recovery and Recycling

These are defined as products, systems and services for the minimisation, collection,

treatment, segregation, recovery, recycling and disposal of waste that may include

paper, organics, metals, glass, plastics, demolition and construction wastes, electrical

and white goods. Examples include advice on waste minimisation, landfill, mechanical

and biological treatment, regulatory advice and technologies such as specialised

containment, shredders, compactors and waste management vehicles.

Water Supply and Wastewater Treatment

These are defined as products, systems or services for the management of the fresh

water environment, provision, treatment, distribution and storage of clean water and

wastewater for industrial and domestic users. Examples include resource development,

demand management, manufacture of wastewater treatment equipment, design,

construction, installation and operation of water and wastewater treatment facilities.

Furthermore, a separate assessment was carried out of the construction sector as many of

its products such as heat pumps, lighting, insulation and building materials could be


21

categorised as environmental products. In addition, the construction sector is also a source

of business for consultancy and other companies providing environmental and energy-

related services.

The issue of market definition raised significant challenges, in particular insofar as SMEs and

micro companies are concerned. This was particularly true in relation to the estimation of

the size and value of the EGS sector on the island of Ireland, because of the fact that

companies with existing (or potential) activities in the EGS sector are often engaged in more

than one industry-sector and/or have diverse activities across numerous sectors.

2.3. The Global EGS Market

2.3.1. Introduction

The traditional market for environmental goods and services comprises suppliers of

pollution control, including waste management, water treatment and land remediation

technologies, as well as energy management and renewable energy. In recent years, the

global market has been mainly driven by compliance and regulatory concerns and the

deregulation of existing utilities. However, it is becoming increasingly evident that the

threat of climate change and the pressure to reduce carbon emissions is beginning to have a

major impact on investment decisions in the sector.

Because the sector is so diverse it can be extremely difficult to define and quantify. A

number of studies have estimated that the value of the sector was in excess of $600 billion

worldwide in 2005 and is likely to exceed $700 billion by 2010 and $800 billion by 2015.19 To

put this in context, and to underline the growing importance of the sector, this is triple the

size of the global aerospace industry.20 21 It is also interesting to note that the recent report

from the UK Commission on Environmental Markets and Economic Performance highlighted

the fact that the market for new low-carbon energy technologies is now estimated to have

reached $100 billion per year.

In terms of regional breakdown, firms in OECD member countries are estimated to account

for about 90% of the global EGS market, as highlighted in the following Table. However, this

situation is now beginning to change and many transition and developing countries, in

particular China, are now seeing the most rapid growth, in response to concerted

environmental problems arising from their rapid industrialisation and urbanisation.

19

ENDS Directory 2008, U.K. CEED Global Market Estimate. 20 UK Commission on Environmental Markets and Economic Performance (BERR/DEFRA Report, November 2007). 21 According to Environmental Business International Inc. (EBI), in 1990, the EGS industry was estimated to have generated revenues of around $360 billion worldwide. By 2001, revenues had surpassed $550 billion and in 2005 is reported to have reached $620 billion, with revenues split about equally between environmental goods and environmental services.


22

Table 2.1 Global EGS Market (2003 estimate): Country/Region Share of Total Market

Source: Environment Business International, Inc., San Diego, CA, 2003.

The difficulty of arriving at a global figure for the value of the EGS sector is compounded by

the fact that most countries do not have adequate data on their EGS markets, and the task

of estimating environmental market size is often complicated by differences in market

definitions. Although the authors of the country studies consulted as part of this review

consistently use a broad definition of EGS, the results are not always readily comparable.22

The most comprehensive study to date on the EGS sector within the EU was conducted by

Ernst & Young for DG Environment.23 This study, which uses the Eurostat definitions of the

sector, estimated the EU-15 market to be valued at €214 billion, which was broadly divided

between €144.9 billion on pollution management and €81.8 billion on resource

management. However, the E&Y study has been the subject of much criticism and

significant question marks exist over the accuracy of the estimates contained in the report.

More recently, the OECD has embarked upon a separate study about the sector. This study

sets out to measure what is called ‘eco-innovation’ in the thirty OECD members. This will

include the identification of mechanisms that influence ‘eco-innovation’ and the promotion

of policies that enable better diffusion of environment related technologies. The following

policy instruments will be examined as part of this study: 24

Framework conditions (innovation, investment)

Public finance for R&D

Environmental technology verification

Performance targets

Mobilisation of finance (move from grants to loans)

Market-based instruments (tax incentives, non-tax instruments)

22

OECD Trade and Environment, Opening Markets for Environmental Goods and Services. Ronald Steenbilk, September 2005. 23 European Commission - DG Environment, Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU. Ernst & Young. September 2006. 24 Xavier Leflevre, OECD, presentation at Today’s Environmental Research, Tomorrow’s Environmental Protection EPA Conference on Irish Environmental Research Dublin February 2008.

USA 38.6%

Western Europe 29.7%

Japan 16.6%

Rest of Asia 4.9%

Canada 2.4%

Central/Latin America 2.2%

Eastern Europe/CIS 2.0%

Australia/NZ 1.6%

Middle East 1.3%

Africa 0.7%


23

“Green Procurement”

Awareness raising (showcasing technologies, eco-labelling)

Acting globally (Institutional problems, developing countries, IP rights)

Allied to this will be a closer examination of specific policy issues around:

Framework conditions (knowledge base, VCs, size of domestic markets)

The value-added by a strategy (e.g. downstream infrastructure)

The need for inter-state cooperation

The techno push and market pull aspects of this sector

Comparison of early technologies vs. late technologies

Problem solving and the spillover effect

Role of the SMEs in the development of ‘eco-innovation’

Once completed, the OECD study will reflect the rapidly changing nature of the sector,

driven by the multiple responses to climate change, declining commodity availability and

energy security.

The CEMEP Report of November 2007 claims that in the UK the EGS sector in 2005 was

estimated to have a turnover of £25 billion and to employ 400,000 people within 17,000

companies.25 However, no data for Northern Ireland was provided. Strong growth is

expected to drive the market value up to £34 billion by 2010, representing an increase of

42% over five years. The main finding of the report, insofar as it relates to this study, is that

environmental services are an expanding market and the UK is emerging as a world leader in

related financial and business services, particularly in carbon markets.

The value of the EGS market in Austria - a country of a somewhat similar size to

Ireland/Northern Ireland - is estimated at €10 billion, with an 8% annual growth rate. The

sector comprises some 650 companies who employ around 25,000 persons. Some 60% of

turnover is exported. According to Austrian sources, Austria is first place in Europe for

renewables and second (after Denmark) in relation to energy efficiency. Austria’s key target

market is Eastern and Central Europe where the value of the EGS sector is estimated at €200

billion. 26

In summary, market estimations from these sources can be tabulated as follows (all figures

converted to Euro at market rates):

25 Commission on Environmental Markets and Economic Performance, Report for the Departments for Environment, Food and Rural Affairs, Innovation, Universities and Skills, and Business, Enterprise and Regulatory Reform, November 2007. 26 Presentation by Josef Proell, Austrian Minister for the Environment at The 4th European Forum on Eco-Innovation, ‘Unlocking global market opportunities’ Vienna, January 31st and February 1st, 2008.


24

Table 2.2: Summary of Market Estimates

Source Market 1990 2001 2005 2010 2015

UK CEED International €540 bn. €825bn. €900bn. €1,050bn. €1,200bn.

EBI Inc. International €930bn.

Ernst & Young EU-15 €214bn.

CEMEP U.K. €34bn. €46bn.

Austria €4bn.

2.4. Investment in the EGS Sector

While reliable figures on the economic value of the EGS sector are difficult to arrive at, the

sharp increase in investment in the sector helps to underline the growing importance of

the sector at global level and the recognition of its future potential. This has been

particularly noticeable in the figures for global venture capital investments.

The venture capital companies have assigned the moniker “Greentech” or “Clean Tech” to

this sector which is indicative of what areas the investment money is following. The year

2006 has been deemed the coming of age of the “Greentech”, with global VC investments

reaching $1,284.9 million.27 This level of activity can be broken down as follows:

U.S. $883.6m

China $221.8m

Europe $157m

Israel $22.5m

This figure represented an almost doubling of the 2005 investments and 2007 is expected to

see a further doubling as global venture capital investments in clean technology as

investment is reported to have surged to $1,100m in the first six months of the year alone.28

While investment in the sector in Europe appears relatively modest, it would seem that the

figures may be significantly understated, as research published by Library House indicate

that overall investment in clean technology by venture capitalists could be closer to £270m,

or 2.5 times the figure suggested in the Dow Jones VentureOne report. 29

Even taking into account the alternative figures on investment in Europe, the scale of

investment is disappointing given the leadership role Europe has taken in clean tech sectors 27

Bringing the Greenback, Jennifer Kho, September 2007. 28 Ernst & Young/ Dow Jones VentureOne, Total investments are on track to reach record levels in 2007, September 2007. 29 Library House, Cleantech goes mainstream, April 2007.


25

like wind power and energy efficiency.

New Energy Finance has also suggested a number of reasons why Europe has been falling

behind, including the traditional weakness of Europe’s VC industry, compared with that of

the US, ‘Balkanised’ national markets and bureaucratic processes for technology support. 30

New Energy Finance makes the following eight recommendations for policy-makers wishing

to promote the business environment for venture capital spending in the renewable energy

sector:

1. Improve general macro-economics for innovation and entrepreneurship;

2. Identify and breakdown regulatory barriers to markets for clean energy providers;

3. Reduce investment risk by improving stability and longevity of clean energy support

mechanisms;

4. Use the public sector to create markets through preferential procurement of clean

solutions;

5. Introduce pan-European standards for clean energy, fuels and technologies;

6. Promote the development of supporting services such as testing and certification,

training, information provision and insurance;

7. Avoid the temptation to pick winners, whether through green funds or any other

mechanism; and

8. Decouple technology support programmes from social and political goals.

Perhaps even more striking is the fact that venture capital in clean technology is now

overtaking investment in areas considered core destinations for this capital. For example, in

2006, clean technology became the third largest venture capital investment category in

North America, trailing only IT and biotechnology.

By way of further example, a recent round of funding by the venture capital company,

Technology Partners Inc. raised $300m.31 The cash will be invested in cleantech and life

science start-ups; they anticipate a convergence between the life sciences and clean

tech/greentech. A prominent example of this convergence would include the bioengineering

of new bio fuels, a move away from the existing production of bioethanol from corn.

While the overall European figures may be somewhat disappointing, the upward trend is

clear. In the UK, for example, (which the CEMEP report claims leads in Europe in share and

spread of venture capital for clean technology, and accounts for almost a third of the total

€1.9 billion invested across Europe in recent years), investment in the sector is beginning to

become more diverse. While energy continues to attract most investment, investments are

increasingly being targeted at a wide range of environmental sectors including materials,

transport, logistics, water and air quality. As a result, UK investments are now claimed to be

30

New Energy Finance, White Paper, April 2007. 31 Green Wombat, Technology Partners.


26

far more diverse than in Germany, for example, where energy accounts for 92% of activity. 32

Moreover, the CEMEP report also draws attention to the fact that the London venture

capital market invested £210m in clean technology companies in 2005, 19% of the £1.1

billion invested in total (which is also significantly higher that previous estimates of

European investment would suggest). It was also noted, however, that while the UK is the

leading venture capital market in Europe, it lags significantly behind the US in scale and pace

of growth.

The relative lack of investment in the UK (and Northern Ireland) means that the so-called

‘valley of death’,33 whereby innovative firms fail because of a gap in funding on the path to

commercialisation, is still a problem, particularly when large scale demonstration projects

are required.

The global warming-driven political and regulatory changes spurring such investments are

unlikely to subside soon. These, allied to a strong innovation pipeline and confidence in the

global drivers supporting growth in the clean technology market (such as government

policies, consumer awareness, energy prices and concern about carbon emissions) will

continue to drive venture capital investment.

The climate change roadmap and energy pricing are uniquely intertwined; the collective

global response to climate change will involve a ‘decarbonisation’ of economies where the

prospective pricing of a tonne of CO2 at perhaps $100 will place both energy efficiency and

renewable energy generation at a competitive advantage over traditional energy sources.

Some commentators suggest that the impact of carbon pricing may be overtaken by hugely

escalated prices for oil and gas – the so-called ‘peak oil’ concept. These factors will drive

further investments in renewable sources of energy in particular.

The conversion of venture capital into IPOs is probably the acid-test for any venture

capitalist. So far, Europe has produced the sector’s largest venture-backed IPO during this

period: the solar company Q-Cells, which was capitalised with a $428.7m transaction on the

Deutsche Bourse in 2005. LDK Solar Hi-Tech, a Chinese company that raised $361.6m on

the NYSE in 2007, saw the highest post-money valuation at IPO - $2.8 billion. EnerNOC, a

demand response and energy management solutions provider, concluded the largest US

clean technology IPO in the first half of 2007 with a $92.6m offering on the NASDAQ in May

2007.

2.5. ICT Opportunities

EICTA, the industry body representing the information and communications technology and

consumer electronics industries in the European Union published a report “High Tech: Low

32

Report of the Commission on Environmental Markets and Economic Performance, November 2007. 33 Op cit.


27

Carbon” highlighting how the digital technology industry will enhance, enable and transform

Europe to help achieve its climate change targets, if used to its full potential.34 35 The focus

of the report is on energy efficiency and not on using ICT solutions in the wider EGS sector.

The European Commission has also highlighted the contribution that ICT can make to energy

efficiency.36

EICTA believes that there are two interdependent solutions to the problem of overall carbon

emissions - product innovation by manufacturers and the intelligent use of digital

technology by consumers, businesses and authorities. Viviane Reding, EU Commissioner for

the Information Society, said that she is convinced that ICT has a key role to play in enabling

energy efficiency improvements across the whole economy, thus lowering emissions and

fighting climate change.

The report identifies how more than 25 different technologies can be applied by other

sectors of the economy, to enhance existing processes, enable new ways of working and

transform our everyday activities, to reduce their overall carbon emissions and energy

consumption. EICTA member companies manufacturing digital technologies are identifying

the best low-carbon technologies and accelerating their development and implementation

so that Europe can achieve its emissions reduction targets. EICTA argues that improving the

efficiency of ICT products is not enough. Ways have to be found to completely decouple

economic growth from energy consumption. This can only happen if the best in class carbon

reducing technology devices are more rapidly applied at a large scale by all other sectors of

the economy.

The report commits Europe’s digital technology industry to monitor the emissions associated

with their products, share best practices through their supply chain, assist to encourage

behavioural change and further develop low-–carbon technologies.

Of special interest to this study are some of the 44 case histories from leading global ICT

companies which are summarised. These include, for example, enhancing, enabling and

transforming technologies and improvements to products and services.

It is clear that a high carbon price will encourage more R&D and product innovation. EICTA

appear to suggest that market conditions and not industry guidelines will drive investment in

carbon abatement technologies and energy efficiency measures.

While it is beyond this study’s terms of reference to identify specific technologies and

solutions, the ICT sector in Ireland will almost certainly benefit as a supplier and enabler to 34 EICTA. High Tech: Low Carbon – The role of technology in tackling climate change, April 2008 .http://www.eicta.org/ ICT Ireland is a member of EICTA. Citing several studies, EICTA points out that the application of ICT solutions could reduce energy consumption in the EU from 10% to 25% by 2020. 35 Intellect. High Tech: Low Carbon. The role of technology in tackling climate change, 2008 http://www.intellectuk.org/content/view/3785/84/ 36 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Addressing the challenge of energy efficiency through Information and Communication Technologies, COM (2008) 241 final, 13 May 2008.

http://www.eicta.org/

http://www.intellectuk.org/content/view/3785/84/


28

some EGS products and services. This is an important area and should be the subject of a

dedicated piece of research which takes account of work done at EU level. 37

2.6. Global Investment in EGS and FDI Opportunities

Environmental goods and services in the US have, over the past number of years, become

defined into a more distinct and documented sector of the economy. This has attracted the

attention of the major fund managers who have packaged together ‘green funds’; one of

the biggest of these, the S&P Global Eco Index is comprised of 30 of the largest publicly

traded companies in ecology-related industries that meet specific investability

requirements.

The index is designed to provide liquid exposure to the leading publicly listed companies in

these industries. The index includes stocks in six different clusters which represent ecology

related industries. A review of this index provides an insight into the operations of the top

30 companies and what opportunities exist for prospective inward investment activity into

Ireland/Northern Ireland. A similar review of medical device or pharma indices would

show significant manufacturing, R&D and back office operations in Ireland. The sector and

origin of the eco index companies can be represented thus:

S&P Eco Index by Location

U.S.

Spain

France

Other Europe

ROW

The sector would probably reflect the previous data on EGS size. All the listed companies

outside the US would have significant global operations; a number of the 14 US companies

would be exclusively domestic. The significant number of French and Spanish companies

reflect the growth in utility conglomerates post-deregulation of services throughout Europe.

A closer inspection of the sectoral areas using the S&P categorisation can be displayed as

follows:

37

Assessing Opportunities for ICT to Contribute to Sustainable Development, DG Information Society, European Commission, ISBN 92 – 894 -9899 – 4. December 2005.


29

S&P Eco Index by Sector

27.68

16.3127.04

10.67

11.087.22

Water Utilities &Infrastructure

Clean Energy Producers

Clean Energy Tech & EquipProviders

Environmental Services

Timber

Water Equip, Instruments &Materials

Examining these individually for enterprise and job creation opportunities demonstrates the

difference between the EGS sector and the afore-mentioned sectors of pharma, medical

devices where capital is mobile and the emphasis is on the production of discrete products.

The sectors of waste management, clean energy producers and water utilities generally

provide services to the point of need. This can include the design, construction, operation

and maintenance of basic utilities required by a static geographic population. So while Aguas

de Barcelona SA used to be the water utility for the greater Catalan Region of Spain, it is

now, through expansion and acquisition, a global provider of water utilities. This scenario is

repeated in the waste sector where major US companies have reached significant scale

through expansion within the domestic market but again, almost exclusively as a provider of

services. The operations of the listed timber ‘eco-industries’ are located where the raw

material is available.

A review of the S&P Eco index and an analysis of venture capital funding in the US and

Europe clearly demonstrates that the mobile investment capital is concentrated in the

renewable energy and energy efficiency sectors. These twin sub-sectors offer the best

opportunities for FDI opportunities on an all-Ireland basis.

Recent FDI emphasis has been more directed at the higher value add propositions of R&D

and services. However, such is the nascent stage of development of these alternative

energy sources that manufacturing operations encompassing Europe, Middle East and Africa

(EMEA) HQ activities and certainly development if not full R&D should be actively sought.

The rationale behind this approach is based on the following arguments:

A significant number of these emerging technologies are based in the U.S. with little or

no international activity. It would be an opportunity to promote the island of Ireland as a

base for their EMEA activities.

The protection of the IP assets of the new energy technologies would be of paramount

importance.

A review of the existing and expanding facilities of these new energy companies show

them located in existing higher cost economies (particularly east/west coast U.S.A. and


30

Germany). While Ireland may not present any discernible cost savings, the full order

books and prospects for these companies suggest that they are at an early stage in the

cycle where cost sensitivities would not be as apparent as with more mature, consumer-

led products.

Ireland’s ability to ‘hit the ground running’ and scale up operations has been

demonstrated consistently in previous ‘waves’ of investment such as medical devices,

ICT and Biopharma.

It should also be borne in mind that while there is no history of solar manufacturing or

development in Ireland, if one considers the constituent parts, extensive silicon fabrication

and optics experience with the like of Analog Devices, Intel, Vistakon and Bausch and Lomb

is already in place. A review of other possible FDI targets such as wind turbines and

associated components could be matched with the engineering capability of the marine

engineering and aerospace industries of the Belfast region.

There are other factors that would be vital in demonstrating the readiness and commitment

to attract new FDI projects. Most significantly, the announcement of clean technology as

the third pillar of the government’s investment in science and technology sends a clear

signal to prospective investors of the commitment in the future. The industrial development

agencies can point to developments such as the refurbishment of the wave tanks in UCC and

QUB, the development of Galway Bay as a smart bay to facilitate development of wave

energy and the iconic wind turbine based in DKIT.

Unless and until Ireland commits to invest public funding for environmental R&D on a scale

comparable to competitor countries such as the UK, Austria and Denmark, and unless the

scientific and engineering skills base is in place, there is little prospect of securing a world

class R&D presence in this area. On the other hand, as has happened in the past in relation

to life sciences and ICT, declaring the EGS sector as a new pillar for science and technology

endeavour will send the right signals to both global sustainable companies, investors and

academia internationally.

The approach in attracting FDI would differ between the maturing energy technologies (e.g.

wind energy and solar thermal) and emerging energy technologies (e.g. solar PV and battery

technology). Wind energy is considered a maturing sector from a technology perspective but

the global demand continues to outstrip supply.

The main players in the wind turbine market are:

1. Vestas 56%

2. GE 14%

3. Enercon 9%

4. Siemens 7%

5. Gamesa 5%

6. NEG 3%

7. Nortank 3%


31

8. Others 3%

Some of these companies have long-established presences in Ireland and currently

manufacture in Ireland through different divisions (Siemens and GE). Contact could be made

with these top tier companies to understand their investment strategy in the coming years

and how they propose to handle the rapidly expanding market. Not all manufacturing sites

are dedicated to the manufacture of complete turbines, the next tier of manufacturing is as

important and probably of more interest to Ireland.

A wind turbine consists of a number of discrete components typically:

Turbine mast, blades and housings

Transmission – e.g. hub, bearings, gearbox, coupling

Generator – e.g. induction coil, transformer

Control and safety system

These can be manufactured at a dedicated site by the top tier company or sub-contracted to

Original Equipment Manufacturers (OEMs). Turbines are generally not assembled and

tested prior to shipping so the proximity of the tiered supply base to the primary

manufacturing is not that critical. It would be vital to understand the existing network of the

top tier manufacturing sites and the supply base that feeds into them. A possible strategy

would be to engage with companies throughout the supply chain with a view to them

establishing operations in Ireland to cater for the increased global demand and at the same

time seeking R&D and back office elements as part of this investment.

Branded Indian and Chinese wind turbine manufacturers have emerged in the past couple of

years. There is every prospect that they will expand their domestic operations and seek to

establish a presence in Europe to service the European market. The agencies should identify

these companies and seek to attract them to establish their EMEA operations in Ireland. By

2007 in China, there were 4 existing Chinese manufacturers, 6 major foreign subsidiary/JV

manufacturers, and 40 other Chinese firms aspiring to produce turbines and developing

prototypes.38

For the emerging technologies the FDI strategy would differ; the industry is at a much

different stage in its lifecycle with a plethora of start ups, highly funded and eager for

expansion. The solar PV industry appears (gauging on the level of expansion and

investment) to be the most likely prospect for FDI. Again the focus should be directed at

attracting these companies to establish EMEA operations in Ireland with manufacturing and

back office services (design, treasury, supply chain). Similar to the wind turbine industry, a

root and branch review of the complete solar PV supply chain should be undertaken.

A solar PV installation can be broken into constituent parts:

38 Renewable Energy Global Status Report, www.ren21.net

http://www.ren21.net/


32

Process equipment

Solar Casting/Wafering

Solar test equipment

Material suppliers

Solar cell assembly

Inverters

Batteries

Solar module assembly and installation

As well as the leading edge solar PV companies, each of these components in the tiered

supply chain offers the potential to attract FDI. At present, current solar PV investment

appears to be concentrated on the flow of investment between Germany and the US. The

agencies should identify the strategic components or companies that could kick start the

industry in Ireland. In the same way as the location of Gammaster and Isotron were critical

to the expansion of the medical device industry, there may be a similar infrastructural

capability required to enable the development of the solar PV industry.

The attributes of Ireland (IP protection, language, agility etc.) for the establishment of a first-

time overseas location should be emphasised to these new energy technology companies. It

is not envisaged that logistics costs should be a determining factor in deciding European

locations, the high value – low cube aspects of solar PV products mean logistics costs are

minimal.

Other possible emerging technologies that could be possibilities for European expansion

would include load management/demand response solutions, new battery technologies and

next generation biofuels technology. For next generation biofuels, an example of the rapid

scaling up in this sector can be demonstrated by Mascoma Inc.

Mascoma Corporation was founded in late 2005 with initial funding from Khosla Ventures

and Flagship Ventures in early 2006. A Series B round of funding was closed in November of

2006.

Mascoma has subsequently received several state and federal grants, including:

A $14.8 million grant from the State of New York for the establishment of a

demonstration plant.

A $4.9 million grant from the US Department of Energy for organism development.

Part of the $125 million US Department of Energy Bioenergy Science Center Grant led by

Oak Ridge National Lab.

A $26 million grant from the US Department of Energy for the establishment of a

demonstration plant.

The Table below presents a number of companies, including Mascoma Inc., who are

attracting funding and media attention for their products or services. The table is intended


33

to be indicative and has been compiled from review of cleantech investment sites and

journals. It does serve to demonstrate the diversity and innovation in the sector. All

companies are US based with the exception of Atlantium which is located Israeli.

Table 2.3 FDI Cleantech Prospects

Company Name

Year Established

Product/Service Sub-Sector Competitors

A123 2001 Lithium ion batteries Clean Technology

Gridpoint, Cobasys

Tesla Motors 2003 Electric Vehicles Clean Technology

Think!, REVA, Zap, Phoenix Motorcars

Mascoma 2005 2nd

. Generation Biofuels

Renewable Energy

Abenoga, Blue Fire, Range Fuels, Sun Opta

Solaicx 2003 Silicon Wafer Technology

Renewable Energy

Suniva

Serious Materials

2002 Low energy dry walls and windows

Energy Efficiency Alternative construction technologies

Bloom Energy 2007 Solid oxide regenerative fuel cell

Clean Technology

Fat Spaniel 2003 Smart metering, demand response

Energy efficiency Converge, EnerNOC, ESCO, Silver Springs

Southwest Windpower

1988 Micro-generation wind turbines

Renewable energy

Joliet

Plextronics 2002 3rd

. generation solar technology

Renewable energy

Atlantium 2003 Hydro-optic water disinfection

Water treatment

EnerNOC Energy demand response, ‘dial down’ power response

Energy efficiency Consumer powerline, Powerit, Converge

Presentation of capability as much as educated workforce and tax regime will define the

island’s success at attracting inward investment from this burgeoning sector. The

commitment under existing Parsons and Beaufort projects, amongst others, will be

important. Another possibility would be to ‘zone’ the island on the basis of capability and

infrastructure for inward investment and sub-market on this basis; as a broad-brush

example:

Belfast – Newry – Dundalk – Wexford = Wind Energy Zone

Limerick – Shannon = Solar Energy Zone and ‘Green’ manufacturing Zone

Belfast – Galway = Wave/Ocean Energy Zone

Cork = Biofuel Zone


34

Ireland has proven itself in the past in the FDI market by trend spotting and identifying the

next inward FDI wave; targeting the right sub-sectors, examining the different elements of

the supply chain, proving capability and infrastructure and possibly sub-branding through

zoning or clustering will ensure a slice of the rapidly expanding ‘green collar’ job market.

In addition to these cleantech companies, IDA Ireland and Invest NI could target the

following companies given their proven track record in the EGS sector.

Table 2.4: Largest 30 Companies Involved in S&P Eco Index

Aguas de Barcelona SA, Spain, - Water and utilities

Allied Waste Industries, USA, - Waste Management

Archer-Daniels-Midland, USA – Biofuels and industrial

China Grand Forestry Resources, China - Forestry

Copel –PNB, Brazil – Energy Utility

Covanta Holding Corp, USA – Waste to Energy

EDF Energies Nouvelles SA, France – Energy Utility

First Solar Inc, USA – PV Cell manufacturer

Gamesa Corp Tecnologica SA, Spain – Wind turbines

Geberit AG, China – Drainage fittings

Iberdrola S.A., Spain - Electric gen./transmission & renewables

Itron, Inc., USA – Utility metering

Kurita Water Industries Ltd, Japan – Water/environmental services

Nalco Holdings Inc, USA/International – Water treatment services

Ormat Technologies Inc, USA – Geothermal power products

Pentair Inc, USA/International. – Water treatment products

Plum Creek Timber Co., USA – Forestry company

Q-Cells AG, Germany – PV cell manufacturers

Rayonier Inc., USA – Forestry/cellulose fibres

Renewable Energy Corporation AS, Norway – silicon product for solar PV industry

Republic Services, USA – Waste management

Severn Trent, UK – integrated water utility

Sino-Forest Corporation, Canada – Chinese/Canadian forestry

Suez SA, France – Integrated waste, water and energy utility

United Utilities Plc, USA – Utility Provider

Veolia Environment

Vestas Wind Systems A/S, Denmark

Waste Connections, USA – Waste management

Waste Management Inc., USA – Integrated waste management

Weyerhaeuser Corp. USA – Forestry products

2.7. Global Market Trends

The findings that can be drawn from this assessment of global markets trends are as follows:

• While some of the market definitions differ between the data sources, a high proportion

of correlation exists in the presented data. All reports reviewed demonstrated growth in


35

the EGS market and a significant growth expected in the coming decade. The EGS market

as a whole is growing steadily and this trend is likely to continue.

• Rapid urbanisation and industrialisation is proving to be the major driver in the fast

developing economies of the east as they struggle to provide acceptable air and water

quality. In the developed world, continuing compliance with environmental rules

continues to drive investment in the sector. Overarching all this at a global level is the

‘decarbonisation’ of society where the twin threats of oil and gas depletion and

responding to climate change act as the biggest single driver in the sub-sectors of energy

efficiency and renewable energy.

• Competition for resources and security of supply are becoming important issues for both

raw materials and energy.

• Venture capital activity in Europe is relatively weak by comparison to the US and China.

The vast amount of environmental venture capital is directed at clean tech/green energy

sources. At a conventional level, investment appears to more conservative and directed

at major utility and infrastructure developers and operators. Enterprise and job

opportunities from this sector must consider the fact that these companies operate

where the populations are located and the products and services investment

opportunities are restricted by this fact. The only obvious exceptions are those

companies making equipment and components in the renewable energy sub-sector.

• At a global and regional level, encompassing the full spectrum of sources references

cited in this report, the recurring sub-sectors with the strongest growth potential are,

without doubt, clean technologies and renewable energy technology. Dwindling

sources and availability of potable water throughout the world are also proving to be a

factor aiding the development of the water/wastewater sub-sector.

• Many EU countries have attained ‘first mover advantage’ in niche areas and will seek to

capitalize on this. For example, Germany (solar), Demark (wind), Austria (energy

efficiency), the UK (marine pollution control).

• Some countries such as Germany and Austria that have a strong tradition in engineering

and eco-innovation have been targeting export markets for environmental goods with

strong government support for several years. On the services side, the UK has been very

successful in growing multi-disciplinary, publicly-quoted professional services with major

European presence including RPS, Enviros, WYG and ERM.

2.8. Conclusions

IDA Ireland and Invest Northern Ireland could usefully co-operate to attract emerging EGS

service suppliers and manufacturers to Ireland/Northern Ireland. Ireland’s capabilities

(including embedded ICT expertise), a strategic commitment to promote the EGS sector on

the island, and the setting up of specialist EGS networks would be key unique selling

propositions to potential overseas investors.


36

3. CHAPTER 3: AN OVERVIEW OF THE EGS SECTOR IN IRELAND

3.1. Introduction

This chapter provides an overview of the EGS sector in Ireland, both North and South,

including its scope and economic significance. Detailed examination of individual sectors,

key trends and sector dynamics as well as the examination of the range and nature of

companies currently operating within each sub-sector is covered in Chapter 4.

At the outset, it has to be pointed out that the unavailability of comprehensive Government

statistics means that it is impossible, to a high degree of certainty, to quantify the size of the

EGS sector, its output, exports, employment or value 39.

3.2. The Irish EGS Sector

There are no published national statistics on the value of output of the EGS sector in Ireland.

The most detailed published information was contained in the Ernst & Young report for the

European Commission on the size of the European EGS sector. This put the value of the Irish

EGS sector at €1,211 million in 2004. 40 This figure can be broken down, in descending value

thus:

Table 3.1: Value of EGS Sector in Ireland; Estimates prepared by Ernst & Young for the

Commission

Waste Water Treatment €445m

Solid Waste Management & Recycling

€215m

Water Supply €177m

Recycled Materials €115m

Nature Protection €101m

Air Pollution Control €76m

General Public Administration €54m

39 It should be noted that changes to industrial classifications and the introduction of NACE Rev.2 should make it easier in future to capture basic statistical information on the EGS sector. These changes are occurring at every level of the classification and will, for example, introduce new sectors for 'Water Supply, Sewage, Waste Management and Remediation'. 40

European Commission - DG Environment, Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU. Ernst & Young. September 2006.


37

Remediation & Clean Up €18m

TOTAL €1,211m

While these figures provide the most comprehensive set of published estimates on the

sector in Ireland, they are deficient in a number of important respects for the following

reasons.

Firstly, the report, which is based on 2004 data, excludes market sectors such as

renewable energy and energy efficiency. These sectors have emerged as being of vital

interest, especially in the context of market growth and employment opportunity.

Secondly, the market valuation is for Ireland only and while Northern Ireland is captured

within the UK total (estimated at €21,224m), no regional breakdown is provided so it is

not possible to arrive at an accurate estimate for Northern Ireland.

Thirdly, estimates of the size of the sector as estimated by industry experts point to a

significant under-estimation of the scale of the Irish EGS sector. For example, the Irish

Waste Management Association estimates that the industry in Ireland is now worth

between €1.2 and €1.6 billion; more than twice the Ernst & Young forecast.

The Ernst & Young report does, however, allow parallels to be drawn between Ireland and

similar countries. So, for example, it would appear that while the value for EGS goods

accounts for approximately 0.8% of GDP in Ireland, the corresponding figures in Denmark

and Austria are between 3 and 4% of GDP. Moreover, on a per capita basis too, the

turnover of the EGS sector in Ireland is estimated to be €300 which again compares with a

typical figure of between €1,200 and €1,600 for Denmark and Austria.

These figures demonstrate the gap between the EGS sector in Ireland and a number of

leading European competitors. And indeed, if the EGS sector in Ireland accounted for a

similar share of national output (e.g. 3% of national GDP), then the sector would be worth at

least €5.5 billion (at 2007 prices).

In terms of international trade too, Ireland is currently a minor player. While significant data

problems exist in relation to determining export trade in environmental goods (as indicated

in several reports for the European Commission) recent research suggests that Ireland’s

share of OECD trade is just 0.5% of the total. The leading exporters are Germany (16.4% of

the total); US (16.1%); Japan (10.8%); Italy (6.9%); and the UK (6.1%). 41

However, following examination of, and consultation with, the sub-sectors, it would appear

that previous estimates of the sector have significantly under-estimated its true scale.

Indeed, based on industry estimates at sub-sector level, it would now appear that the real

size of the Irish EGS sector is in the region of €4.3 to 5.2 billion. The basis of this estimate is

set out in the following table.

41 Legler et al (2007), p 152.


38

Table 3.2: Value of the EGS Sector in Ireland: Revised Estimates (€m)

Air Pollution Control 4-5

Clean Technology 350-700

Environmental Consultancy 60 – 75 (island)42

Environmental Monitoring n/a

Energy Management 2043

Marine Pollution Control 3 - 5 (island)44

Noise n/a

Remediation of Land 46 – 58 (island)45

RES 600 - 70046

Waste Management 1,200 – 1,60047

Water/Waste Water >2,00048

TOTAL 4,280 – 5,160

In addition to the sectors referred to in Table 3.2, it is estimated that the potential value per

annum of the emerging market for energy efficiency in the building and house construction

sector could be in the region of €50 million per annum on the assumption that some 40,000

houses are retrofitted each year, at an average cost of €15,500 per unit.

Moreover, it is important to note that the estimate of the size of the Irish EGS market under-

estimates the quantum of business as companies are increasingly:

Addressing the environmental impacts of products throughout their life cycle49

Beginning to embed low-carbon and cleaner technologies in process and product

development

Using recycled material on a more systematic basis50

Re-engineering processes to cut costs and improve environmental impacts51

Incorporating environmental factors (such as packaging) into initial design52

Actively seeking to reduce or offset their (or their suppliers’) carbon footprint. 53

3.3. The Characteristics of the EGS Sector in Ireland

It is estimated by the Consultants that the EGS sector in Ireland is valued at around €4.3 to

42 Industry estimate 43

Industry estimate 44 Industry estimate 45

Industry estimate 46 Consultant’s estimate 47

Industry estimate 48 DEHLG Water Services Investment Programme 2007 – 2009 capital costs only. 49 National Industrial Symbiosis Programme case studies, 2007. 50

CEMEP case study: Scott Brothers, Impetus Waste Management and Plasrec, 2007. 51 WBB, Carbon Trust case study, 2007. 52

Improving Lives, Delivering Value: Philips Sustainability Report 2006. 53 Carbon Footprints in the Supply Chain: the Next Steps for Business, Carbon Trust, 2006.


39

5.2 billion and accounts for approximately 0.5% of OECD trade in goods and services. 54

The sector comprises companies of all size categories. With the exception of some major

players (e.g. Greenstar) the Irish EGS market is dominated by SMEs who have established a

substantial business presence over the past ten years. 55 This has largely been associated

with the significant increase in public investment in environmental services and

infrastructure. It is important to note, however, that key sectors such as renewables,

environmental consultancy and waste and water are dominated by subsidiaries of UK and

EU parent companies. This may have the effect of limiting the export opportunities of their

Irish operations as the parent typically is responsible for new emerging export market

business development.

To a very large extent, with a few notable exceptions, the sector is playing catch-up with the

technologies in greatest demand (RES-E and waste management) that are deployed and

exploited by European companies of scale. This has implications for the prospect of an Irish

company breaking in to the market for PV (solar technology), for example, without the

setting up of a joint venture with an existing manufacturer.

On the other hand, many EGS markets are starting from a low base of activity so it should be

possible to gain market share in niche areas.

While it is difficult to be precise about the future, the following is an initial estimate of the

level of investment that may be needed by 2020 if Ireland was to meet its legal obligations

on foot of EU Directives on the environment, RES-E and energy efficiency.

Table 3.3: Total EGS Forecast Investment Levels to 2020 (Ireland)

Retrofitting of buildings to comply with BER standards €25 billion56

Climate change/RES-E investment €0.87 billion57

Investment in waste treatment €2 billion 58

Investment in water and water treatment €8 billion 59

Other €2 billion 60

Total €37.87 billion

54 The Strategy for Science, Technology and Innovation estimated that the environmental S sector employs 6,000 in the public and private sectors and invests some €1billion annually. 55 Companies employing less than 250. 56

SEI estimate based on average cost per household of €25,000. Obviously not all houses will invest this amount. The forecast figure illustrates the potential for energy efficient building materials. There are some 2 million buildings/housing units in Ireland. 57 The Commission’s Impact Assessment of the EU’s climate change/renewables strategy put the economic cost to Ireland at around 0.47% of GDP, SEC (2008) 85/3, 23 January 2008, Table 11. 58

A&L Goodbody Consulting, Ireland’s Strategic Infrastructure Investment 2020, September 2005. 59 Includes €5.8 billion in Water Services Investment Programme 2007-2009 (September 2007) and investment needs (€2.6 billion) as set out in Greater Dublin Strategic Drainage Study. 60 Consultant’s estimate.


40

3.4. The EGS Sector in Northern Ireland

The most recent assessment of the EGS Sector in the UK was the Department of Trade and

Industry study ‘Emerging Markets in the Environmental Industries Sector November 2006’,

published in November 2006, which included Northern Ireland. This study estimated annual

turnover in the sector in the UK at around £25 billion in 2005 - roughly the same as the

pharmaceuticals and aerospace sectors.

A recent study on the Northern Ireland environmental business sector by White Young

Green on behalf of Belfast City Council estimated that the local sector was worth

somewhere in the region of £201 million in 2003, a growth of some £58 million since 1999.

Of this, waste management accounted for 46% of the sector, comprising recycling and waste

disposal.

Whilst an Invest NI analysis of the sector in 2004 concluded that there are an estimated 218

environmental products and services businesses in Northern Ireland, the White Young Green

report estimates that there are in fact somewhere in the region of 416 businesses in this

sector in the Province, employing approximately 4,500 people in total. This variation is likely

to be due to the varying definitions of the environmental industries. A further Invest NI

survey about the size of the sector is underway.

Since the White Young Green research in 2003, an increasing number of environmental

consultancies have entered the market place in Belfast, both indigenous and international.

This has resulted in a change in the split of the sector with waste management and recycling

no longer the dominant sectors in the Belfast City Council area. At a local level the smaller

local consultancies now tend to offer specialist services, for example, SDS Energy, specialist

energy consultants and Geoman, specialist geotechnical consultants.

Given the emphasis on and support for the environmental industries across local, national

and international policy, the sector is set to continue its strong growth. Particular areas of

potential are;

Energy management, projected to grow at approximately 10% per annum over the next

10 years;

Renewable energy, the market is estimated to grow by at least 15% per annum to 2015,

although this is considered by some industry experts to be conservative;

Contaminated land remediation, growth rates for the sector are estimated at

approximately 5% per annum;

Cleaner Technologies and Processes, growth rates of 10% per annum are expected; and

Environmental consultancy, the sector is estimated to grow at an average of 10% over

the next 10 years.

The following Table sets out an estimate of potential ‘environment’ public investment in

Northern Ireland for the period 2008-2018:


41

Table 3.4: Public Investment in Northern Ireland, 2008-2018

Water and waste water £2.535m

Waste management £436m

Flood risk management £82

Environment £65

TOTAL £3.118m

Source: Investment Strategy for Northern Ireland, Section 5.4

3.5. Investment in the Irish EGS Sector

While international investment in the EGS sector has increased dramatically (with

particularly strong growth being seen in the US and in the UK), there is little evidence yet

that the Irish VC community has woken up to the commercial opportunities within the Irish

marketplace.

A review of the Irish Venture Capitalist Association’s (IVCA’s) Techpulse report for 2007

shows approximately 50 Irish VC deals concluded deals worth €225m across all sectors; none

of the deals listed could be defined as being in the EGS sector.

Consultation with the Irish VC industry indicates that the EGS sector is viewed as one driven

by legislation and as being primarily subsidy led. A key issue for the VCs is the level of capital

expenditure required in products and technologies which are not yet proven. They view the

renewable energy sector, mainly wind and biomass, as entering a mature phase and a

number of other EGS technologies as being too early in their development to attract the

interest of the VC community. The good R&D infrastructure existing in Ireland was

commented upon but overall, the lack of a track record in the EGS sector is predicating

against its future development.61 This attitude is consistent with findings contained in an

OECD briefing, where it was stated that technology and market risks were issues that may

create barriers to investors.62

At a more traditional level, the emergence of ‘Green Funds’ in the investment community

has been a distinctive feature of activity over the last number years. Sustainable banking is a

growing area with key investment banks such as Merrill Lynch and Citigroup investing in the

area of environmental risk management. KBC Asset Management, for example, has been

the leader in this area with a suite of alternative energy, water and climate change funds and

Al Gore launched a similar environment fund on behalf of Merrion Capital. All funds have

proven popular and have performed well. However, closer examination of these funds

reveal that they are generally made up of composites from S&P indices for water, clean

energy and other commodities. In the recent offering from Merrion Capital, none of the

companies listed in the prospectus had a presence in Ireland, north or south. However,

despite this, green investments and investing particularly in alternative energy and climate

61

Irish Venture Capital Association, Regina Breheny, February 2008. 62 OECD, Xavier Leflaive, EPS Research Conferenc, Dublin, February 2008.


42

change strategies are at the top of the agenda in terms of being flagged as major growth

themes over the next five years. 63 Similarly, it is clear that the major banks have also

become more active in this area and are also beginning to see the value of the renewable

energy sector, in particular.

Funding provided through Business Expansion Schemes (BES) activity has tended to

concentrate on asset-backed investments such as wind farms. However, it is interesting to

note that a new ‘Green Fund’ promoted by BVP Investment Limited in the 2007 round of

BES funding did not attract sufficient funding and has now been re-positioned for 2008.

The recent announcement of the establishment of the ‘Emerald Fund’ by the New York

Pension Funds (retirement fund of the city employees) is significant64. This fund has been

established as a vehicle to invest $150 million in a range of projects, the majority of which

will be located in Northern Ireland. While the exact details have become available at this

point, categories of investment include public infrastructure, real estate, waste management

and renewable energy.

In summary, the cleantech area is being viewed as one with huge promise by the

international venture capital community and it is expected that investment will continue to

flow as long as there are suitable projects and technologies. The challenge in Ireland will be

to get the venture capital community to move away from the staples of bio-technology and

software that pre-occupy most of the funding activity and ultimately, result in an Irish

equivalent of Q-Cells launching on the ISEQ and beyond.

3.6. Mergers and Acquisitions

A review of merger and acquisition activity can also provide a practical barometer to growth

in a business sector and for the EGS sector this is no different.

In total, there were approximately 160 mergers and acquisitions recorded in Ireland in 2007

across 12 major commercial sectors with property and IT and Telecoms being the most

prominent. The EGS merger and acquisition activity would fall into three of these sectors:

o Support Services

o Industrial

o Professional and Technical

These three areas accounted for 47 deals or almost 30% of all completed deals in 2007;

displayed as follows:

63

Business and Finance, 41 shades of green, Nicole Matthews, 18 January 2008. 64 See for example www.comptroller.nyc.gov/press/2008.


43

A closer look at these 47 deals reveals that 13, or 30%, were exclusively in the EGS sector

(i.e. 8% of the total number of deals).

While the values of the deals recorded is relatively modest when compared to the values

involved in construction for example, it does shed light on the activity and evolving trends in

the EGS sector.

The area of waste management shows the largest number of deals in 2007. This reflects the

continuation of a process commenced over the past number of year where the larger, well-

funded waste management companies have acquired smaller regional operators or

specialist waste contractors. Once deregulation commenced with domestic and commercial

waste and the requirement for additional separation of waste streams, a plethora of

companies were established in this area. There has been a steady move towards

consolidation as the ability of the small regional operators to compete with the

infrastructure of the large waste management companies becomes less and less. The chart

above reflects three acquisitions by Greenstar Ltd. (a subsidiary of National Toll Roads Ltd.)

bringing to 14 the number of acquisitions made by Greenstar since 1999. The scale of the

industry and other players involved is discussed in greater detail in Chapter 4.

In 2007, in the environmental consultancy sub-sector, the White Young Green Group

EGS M&A Activity 2007

2

5 2

1

2

1

Environmental

Consultancy

Waste Management

Energy Management

Environmental

Monitoring

Renewable Energy

Wastewater treatment

M&A Sectoral Analysis

40%

45%

15% Support Services

Industrial

Professional &

Technical


44

(www.wyg.ie) acquired two environmental/engineering consultancies with the acquisition of

Malachi Cullen & Partners and PH McCarthy Engineers. This continues a trend where large,

publicly-quoted, UK-based consultancies acquire indigenous, long-established Irish practices.

The majority of multi-disciplinary practices on the island of Ireland are now owned by

overseas interests.

While on the surface, this demonstrates a growth and buoyancy in the sector it also has

some adverse effects. At a time when Ireland is trying to establish itself as a ‘knowledge

economy’ and a player in the global EGS market, the domination of this sector by overseas

companies precludes these practices from developing export service capability as these

would generally be handled by the subsidiary located in that export market. This is at a time

where there is a recognised shortage in the availability of skills in the areas of renewable

energies, alternative fuels and energy efficient technologies throughout Europe and further

afield. This situation is beginning to change however, with EI taking an active role in these

companies. This is discussed in further detail in Chapter 4.

The final days of 2007 also saw the sell-off of the most iconic and successful company in the

EGS sector in Ireland with the €1.08billion sale of Airtricity to Scottish and Southern Energy

(UK’s second largest electricity generator). Airtricity was predominantly owned by Irish

interests (NTR 51% holding); the company was headquartered in Dublin; and a large amount

of its engineering, marketing and commercial capability resided here. The future of this

activity in Ireland is unclear at this point.

The importance of the role of a company like Airtricity should not be understated, leaving its

sister company Bioverda the only major indigenous Irish company of European-wide scale.

When we look at the development of the ICT sector, the emergence of major plcs like Iona

and Baltimore Technologies aided the overall development of the sector and led to a

significant number of ICT spin-off start ups (57 in the case of Iona Technologies alone).

The sell-off also casts doubts on the future strategy of NTR (www.ntr.ie) as the company

entered the EGS space with a unique combination of renewable energy with Airtricity and

Bioverda and the waste management operations of Greenstar. The sell-off of these, allied to

the cash disposal of other assets in the group, leaves the group effectively rebuilding their

presence.

3.7. Industry Views

A stakeholder consultation meeting was held at the offices of IBEC on 28 January 2008.

Initial discussions focused on selecting the sectors with greatest potential: renewable

energy, waste, water and wastewater. Sectors such as consultancy and energy management

service the others.

A diverse range of views was exchanged with the following key points emerging:

http://www.wyg.ie/

http://www.ntr.ie/


45

Energy Energy, in particular response to the climate change agenda, is

strategically important and influencing investment decisions. There is a

need for capital incentives in renewables, especially biomass but also

sea, wave power etc. Planning delays are a major deterrent to growth –

it takes too long to get facilities built. There is a need for clarity and

security on pricing to support new technologies such as wave power.

Not enough focus on heat as a product – there is a need for

government policy to support this, from biomass etc.

Waste Venture capitalists are unlikely to invest in waste in Ireland due to the

lack of policy clarity and uncertainty on the scale of market and lack of

data about waste streams. The critical factor in the waste sector is

price. Also the public/private issues with regard to collection and

management is a problem. Stakeholders must become partners to

achieve optimal solutions. Waste market growing and could increase by

€1 billion to €2 billion due to Landfill Directive obligations. UK market is

massive.

Construction The Building Regulations now provide a clear target.

Project inception delays Delay in obtaining planning permission and the difficulty in securing

grid connection are significant obstruction to project implementation –

planning legislation needs to be amended.

Regulatory enforcement Compliance with regulation is a main driver for some sub-sectors and

will generate opportunities. Stricter enforcement of regulations was

identified by some industry players as a potential driver.. The lack of

consistency in relation to enforcement across different regions and

different local authorities was also highlighted as an obstacle for

businesses.

Shared international

marketing

Enterprise Ireland and InvestNI could be a conduit to sell Irish expertise

abroad – many projects are too large for SMEs but they can achieve

niche markets or work with other companies to fulfil overall large scale

projects.

Research, education and

training

There is a need to develop people, processes and products. Research

support should encompass short-term projects: 3 – 6 months and the

structured connection of “concept – proving ground –

commercialisation” should be developed. Not enough R&D on waste.

Difficult to get good people. More training is needed. Need to support

R&D commercialisation. Northern Ireland third level institutes are

considered easier to deal with in terms of getting work done.

Companies Wish List Support (funding) for renewable.

Education and training to support the sector, more focused and applied

R&D for the EGS sector

Stronger legislation and better enforcement, consistent enforcement

Information on supports, incentives, data, market information,

legislation, niche areas, growth areas etc.

Supports to commercialise R&D

Removal of public/private dichotomy in waste collection and

management

Benchmark information from other countries


46

3.8. Support Structures in Ireland

Policy instruments as well as regulatory measures have been put in place in support of all of

the EGS sub-sectors covered in this study.

Substantial time, efforts and resources have been invested in Ireland, in several areas, to

support the uptake of environmental technologies by government departments, state

agencies and private organisations through grant aids, research etc.

Table 3.5 Agencies/Mechanisms Providing EGS Support in Ireland

Environmental Protection Agency Science Foundation Ireland (SFI)

Enterprise Ireland Marine Institute

IDA Ireland Higher Education Authority

Shannon Development Department of Transport

Udarás na Gaeltachta Teagasc

Sustainable Energy Ireland Forfás

Health Research Board Geological Survey of Ireland

InterTrade Ireland Department of Environment, Heritage and

Local Government (DEHLG)

The North South Market Development

Group

Department of Enterprise, Trade and

Employment (DETE)

The Market Development Group (MDG) Department of Agriculture and Food (DAF)

Department of Communications, Marine and

Natural Resources (DCMNR) (Renewable and

Alternative Energy Division)

Many of the instruments and incentives implemented by these agencies are listed in the

Irish National Roadmap for the implementation of The Environmental Technology Action

Programme (ETAP).65 Two studies, funded under the 2005 ERTDI Environmental

Technologies research programme, also identified other specific support and research

programmes in Ireland. 66, 67

65

Department of Environment, Heritage and Local Government Ireland’s national roadmap for the implementation of the Environmental Technologies Action Plan (ETAP) DEHLG, 2006 – available at the ETAP website: http://ec.europa.eu/environment/etap/index_en.htm 66

Kelly, David and Ryan, Jim (CIRCA Group Europe Ltd) Environmental Technologies: Guidelines on How to Take a Pilot Project to Market (2005-ET-DS-25-M3) Final Report, Environmental Protection Agency, Wexford, 2007. 67 Coakley, Tadhg et al. (Clean Technology Centre) Investigation into why existing environmental technologies

http://ec.europa.eu/environment/etap/index_en.htm


47

A possible re-alignment and re-prioritisation of state supports falls outside the study’s Terms

of Reference.

3.9. Support Structures in Northern Ireland

A range of mechanisms and instruments are in place in Northern Ireland which directly or

indirectly support the development of the EGS sector. These broadly reflect those that

operate in the rest of the UK, with regional variations tending to be ‘versions’ of those

operating in the other regions of the UK. In some respects, these supports mirror those

provided by the Irish agencies.

Table 3.6 Agencies/Mechanisms Providing EGS Support in Northern Ireland

Environment and Heritage Service Envirowise

Invest NI Knowledge Transfer Networks (KTNs)

Department of Enterprise, Trade and

Investment

Market Transformation Programme

Department of Agriculture and Rural

Development

Carbon Trust

Department Regional Development

(Transport)

Climate Change Levy

Department of Environment for Northern

Ireland Planning and Environmental Policy

Group

Enhanced Capital Allowance scheme for

energy and water

Waste and Resource Action Programme

(WRAP)

Research Councils

National Industrial Symbiosis Programme

(NISP)

Northern Ireland Geological Survey

Business Resource Efficiency and Waste

programme (BREW)

InterTrade Ireland

Waste Planning Groups (ARC21, SWAMP,

NWRWMG)

The North South Market Development

Group

Many of the instruments and incentives implemented by these agencies are listed in the

United Kingdom National Roadmap for Implementation of the Environmental Technologies

Action Plan for the implementation of The Environmental Technology Action Programme

(ETAP). 68

are underused (2005-ET-DS-19-M3) Final Report, Environmental Protection Agency, Wexford, 2007. 68 Department of Environment, Food and Rural Affairs (DEFRA). United Kingdom National Roadmap for Implementation of the Environmental Technologies Action Plan. December 2005 – available at the ETAP website: http://ec.europa.eu/environment/etap/index_en.htm

http://ec.europa.eu/environment/etap/index_en.htm


48

A number of structures can be highlighted as having had a direct influence on the EGS sector

at a UK level, most notably WRAP, the Carbon Trust and the National Industrial Symbiosis

Programme (NISP). This has been achieved via number mechanisms:

State aid for green technologies such as material processing or energy efficiency;

Support for applied R&D for near to market technologies; and

Support for applied research to underpin policy development and decision making.

3.10. EU State Aid Guidelines on Environmental Protection

A report was prepared in 2005 for the industrial development agencies that identified a

number of new State aid schemes which could be introduced to assist the EGS sector.69 The

proposed measures were based on schemes currently in operation in other member states

which were approved under the (then) EU State aid guidelines on environmental protection.

In summary, the following types of schemes were identified:

Table 3.7 Possible EU State Aid Compatible Schemes

The WRAP Capital Grants Scheme (UK)

The Carbon Trust Low Carbon Innovation Programme and Enhanced Capital Allowance

Measure (UK)

The kfW Bank’s ERP Environmental Protection and Energy Saving Programme (Germany)

The kfW Bank’s Programme to promote Renewable Energies (Germany)

The Fideme Investment Fund (France)

SenterNovem’s Carbon Reduction Plan (the Netherlands)

SenterNovem’s Energy Investment Tax relief Scheme (the Netherlands)

The Green Financing Measure (the Netherlands)

The Programme for Cleaner Technology (Denmark)

In the meantime, the Commission has published revised guidelines for environmental

protection that will have to be taken into account in the preparation of any new schemes to

support the EGS sector.70 The basic principles underpinning the revised guidelines remain

the same. There are some subtle but important changes as follows:

The guidelines apply to aid for environmental studies, district heating, aid for waste

management and aid involved in tradable permit schemes.

69

Assessment of the Potential to Develop Environmental State aid Supports for Enterprise, a report for Forfas, A&L Goodbody Consulting and the Clean Technology Centre , May 2005. 70

European Commission, Community Guidelines on State aid for Environmental Protection, 23 January 2008. OJ C 82 dated 1 April 2008.


49

The permissible levels of aid intensities have increased considerably. If aid is awarded

on foot of a competitive tender (e.g. to build an all island waste or recycling plant) up to

100% public funding may be provided.

In certain situations tax reductions may be considered as compatible aid.

Where large amounts of aid are proposed a detailed assessment will be carried out.

However, once a scheme is approved individual company assessments will not be

undertaken.

Under a (forthcoming) Block Exemption Regulation, environmental aid under a certain

amount will not have to be notified.

3.11. Conclusions

The assessment of the EGS sector leads to the following preliminary conclusions:

The EGS sector in Ireland is valued at some €4.3 to 5.2 billion, with Northern Ireland

accounting for approximately £624m.

In common with European trends the overall sector is growing.

The largest sub-sectors, and indeed those with the greatest potential, are renewables,

energy efficiency, waste management, and water.

Many EGS companies do not rely on the State development agencies for core funding.

They use their own resources, or those of investors, to develop their business.

The most active and most of the largest EGS companies are subsidiaries of non-Irish

parents who either acquired capacity through mergers and acquisitions or grew their

businesses organically.

EGS companies are, however, generally not aware of export market opportunities. The

majority of small companies show no interest in expanding outside their niche area of

expertise in the domestic market.

An all-island ‘One-Stop-Shop’ providing market intelligence at sub-sector level may be

needed as the service offerings of the state agencies North and South are not

coordinated.

The VC community is risk adverse to investments in EGS companies, with few

exceptions. To this end, the relevant state agencies need to enter into dialogue with the

VC community to brief them about the importance now attached to the EGS sector in

Ireland on foot of this report.

The State agencies have to hand considerable detail about EGS supports which work

successfully in other member states that are compatible with EU State aid rules.


50

4. CHAPTER 4: THE EGS INDUSTRY BY SUB-SECTOR

4.1. Introduction

This section is structured in the following way.

Each sub-sector is defined. Following a short introduction that seeks to highlight the main

characteristics of the sub-sector, an estimate of the size of the market is set out with special

features such as trends noted where relevant. Then the current and future drivers are

identified and assessed. Where the main consistent driver is regulatory compliance, the

most relevant primary legislation is identified. The strengths and weaknesses of the sub-

sector are then set out. Possible new business opportunities are identified before

conclusions relevant to the sub-sector only are drawn.

At the outset, it needs to be pointed out that the EGS sector is not categorised as a group for

the purposes of collecting official statistics using the NACE 4-digit classification. Therefore it

is not possible to be accurate about: the precise number of companies involved on the

island; the volume or value of exports and intra-island business; numbers employed; and as

a consequence trends in relation to key metrics. The data collected is therefore based

mainly on secondary sources, including feedback from some 30 companies in the EGS sector

who were contacted during the course of the project, industry associations and consultant’s

estimates.

4.2. Air Pollution Control

Products, systems and services for the prevention, reduction and removal of gaseous and

particulate pollutants from air. Examples include external and internal emission and odour

control, filters and catalytic converters and treatment systems. This sub-sector may also include

Environmental Monitoring, Instrumentation and Analysis activities specific to this sector.

4.2.1. Introduction

Air pollutants are generated through space heating, transport, electricity generation,

agriculture and industry. Sources are either stationary (manufacturing industry, power

generation, refining, quarrying, incineration etc.) or mobile (road, air and rail transport). There

are also natural sources of atmospheric pollutants (including forest fires and VOC emissions

from plants). Pollutants may be particulates (dust from quarrying, fine particles from diesel fuel

combustion) or gases and vapours (SO2, NOx from fuel combustion, complex molecules arising

from biological degradation in landfills, composting, etc.). Control of these pollutants is

achieved through technologies such as thermal oxidation, oil absorption, biological oxidation,

incineration, catalytic oxidation, flue-gas desulphurization (FGD), wet and dry scrubbing,

filtration, cyclone separation and carbon capture for stationery (or point-source) emissions and


51

fuel substitution, improved combustion efficiency, particulate filters and catalytic converters for

transport sources.

4.2.2. The Sector in Ireland

The most important companies operating in this sector in Ireland include:

• Manotherm

• Enviros Consulting Ltd.

• MacArdle McSweeney Associates

• Bord na Mona

• P&IDC

• MegTec

• GPE

• Euro Environmental Services

• BMD Engineering

• PM Group

The engineering and environmental consultancies specify the appropriate technology and

this is then sourced mainly from European manufacturers. Bord na Mona is the only

indigenous manufacturer of air treatment plants. Local fabricators have a track-record in

fabricating and installing polypropylene, steel and aluminium ducting, stacks, housing, fans

etc. The size of the domestic market in Ireland for products and systems (i.e. not

monitoring) has been estimated by one company in the sector as in the region of €4-5m.

Most of the infrastructure required under IPPC and Waste Licensing has been put in place in

what is a mature market.

Power generation accounts for 62% of SO2 emissions. The EU National Emissions Directive

has set a target of 42,000 tonnes in Ireland by 2010. Current emissions are in the region of

60,000 tonnes71; further SO2 emissions reductions through the use of natural gas and low-

sulphur fuels are now limited which means that more advanced technology-based controls

are necessary. Flue-Gas Desulphurisation (FGD) is planned for Moneypoint coal fired

power station, to comply with the SO2 ceiling of 42 kt in 2010. Lurgi Lentjes AG was

awarded this contract worth €150 million in 2004. This could be viewed as an example of a

maturing sector where compliance would result in a tailing off of market value.

4.2.3. Regulatory Framework

The EU’s policy to reduce carbon dioxide and other greenhouse gases has a major impact on

carbon-dioxide emissions, in particular, but also NOx emissions and methane (the latter

particularly from agriculture in an Irish context). The Waste Management Act licensing

71 EPA, Environment in focus 2006 – Environment indicators for Ireland.


52

regulations require landfill gas collection and treatment.

Many EU Directives that been introduced in order to limit and control the concentrations of

pollutants in the air, including:

• Directive 96/61/EC concerning Integrated Pollution Prevention and Control (IPPC), the

main purpose of which is to reduce pollution by scheduled industry and power

generation. A number of solid waste and fume incinerators (thermal oxidizers) are in

operation in the pharma-chem sector to comply with limits imposed by the EPA in IPPC

licences issued since 1994.

• Air Quality Framework Directive 96/62/EC on ambient air quality assessment and

management.

• Other Directives specific to certain air pollutants:

• Directive 99/13/CE relating to VOC emissions,

• Directive 99/30/CE fixing limits for emissions of nitrogen and sulphur oxides (NOx, SOx),

lead, particulate matter,

• Directive 2000/69/CE fixing limits for emissions of carbon monoxide (within 2005) and

benzene (within 2010).

• Directive 2000/76/CE on waste incineration.

• Directive 2001/80/CE on emissions from combustion plants (SOx, NOx, and dust).

• Directive 2001/81/EC on national emission ceilings, which sets upper limits for each

member State for the total emissions of SO2, NOx, VOCs and ammonia by 2010.

• Directive 2003/87/CE establishing a greenhouse gas emission trading scheme (EU ETS)

within the European Community.

• Directive 2004/107/CE imposing emission limits for metals like arsenic, cadmium, nickel,

and for poly-aromatic hydrocarbons (PAH) within 2012.

The consequences of most of the earlier Directives have now worked their way through the

economy. The Thematic Strategy on Air Pollution is part of the European Commission's 6th

Environmental Framework Programme and sets out the main objectives for improving air

quality up to the year 2020, including the so-called CAFÉ (Clean Air For Europe) Directive.

The proposed Directive on Industrial Emissions tightens minimum emission limits in certain

industrial sectors across the EU - particularly for large combustion plants. It introduces

minimum standards for environmental inspections of industrial installations and allows for

more effective permit reviews.

4.2.4. Trends

Carbon dioxide capture and storage (CCS) is a topical subject receiving a lot of attention for

its potential to reduce emissions. Sustainable Energy Ireland has commissioned a study into

the potential for CCS in Ireland.72 In the report carbon dioxide storage was considered in an

aquifer beneath Moneypoint, the Kinsale and Corrib gas fields, and in enhanced oil recovery

(EOR) in the, as yet, undeveloped Spanish Point oil field. The cost of electricity should

72 Carbon Dioxide Capture and Storage in Ireland, Costs, Benefits and Future Potential, SEI, 2006.


53

carbon storage be deployed now would increase by 30% in the short-term (based on 2006

estimates and compared with coal fired electricity generation) and assuming

implementation of a carbon-tax.

4.2.5. Drivers

The main instrument for change is the regulation of the emissions from the motor industry

(via fuel standards and emission standards achieved via engine improvements and tail-pipe

treatment), other sectors of industry and setting ambient levels for atmospheric pollutants.

Odour control requirements in urban wastewater treatment sludge dewatering plants is

being funded under the NDP. Bord na Mona is one of the main players in this market.

4.2.6. Weaknesses

Little market growth is predicted as the IPPCL market is a mature one and there is a decline

in growth in manufacturing in general in Ireland. There is an exception for particulate filters

in the transport sector where solutions are coming from the vehicle manufacturing industry

based in the EU countries of Germany, France, Italy, Sweden, Spain, UK, Czech Republic and

Slovakia or imported from Japan and the US.

4.2.7. Case Studies

Bord na Móna Environmental Ltd.

Bord na Móna Environmental Ltd. offer a range of process technologies and services to meet odour

and VOC removal requirements across a broad range of industries and in the municipal sector. With

over 500 installations worldwide and flow rates of up to 500,000 m3/hr, Bord na Móna

Environmental Ltd. (on foot of a strategic decision to diversify its business) has built up a wealth of

experience and expertise over the years.

Of all the potential pollutants that give rise to public concern, odour ranks highly. This is primarily

due to the annoyance and nuisance caused by persistent odours, as against concern about adverse

health effects. Bord na Móna Environmental Ltd. has the capability necessary to treat air emissions

and odours from a range of applications including: municipal and industrial wastewater treatment

facilities, municipal solid waste handling and treatment facilities, food processing and agri-industrial

facilities, leather tanning, and solvent emitting industry such as flexographic printing applications

and petrochemical industry among other applications. They have developed in-house patented

biological technologies which have proved highly successful, with remarkably predictable

performance when applied to difficult situations.

However, what is important is that biological systems are engineered such that all critical

parameters can be monitored and controlled. Biofiltration is, by definition, the aerobic degradation

of pollutants in the presence of a carrier media. Biofiltration is successfully emerging as a reliable,

low-cost option for a broad range of air treatment applications. It is now becoming apparent that

biological treatment will play a far more significant role in achieving environmental control on a


54

wide variety of air emissions, with biofilters offering advantages such as low operating and

maintenance costs and the ability to treat highly variable inlet concentrations across a wide range of

applications. Installation is facilitated by off-site or on-site modular construction.

4.2.8. Barriers

Any air pollution control technology must be demonstrated in the particular application and

accepted as technically and economically effective in the long term before it will be adopted.

4.2.9. Opportunities

Odour control is a niche opportunity in this sector. The opportunities lie in overseas

markets, in particular the UK, and the US and also the catch-up required in new EU member

states to comply with EU Air Quality legislation. Engineering consultancy may be provided

to overseas markets that are adapting to EU Directives, but it must be recognised this area is

mature and well serviced globally.

4.3. Building and House Construction

While the building and house construction sector is not strictly captured by standard

definitions of the EGS sector, it is an important market for EGS products and services and

offers significant potential growth opportunities going forward.

In addition, it could be argued that some construction services, provided by engineers,

architects and quantity surveyors for example, could also fall within the EGS sector

categorisation.

4.3.1. The Construction Sector

In 2007, the value of output in the construction industry in Ireland was almost €37 billion

and accounted for some 20% of GDP, or 23% of GNP. The sector has seen phenomenal

growth in recent years, with residential construction output (which accounts for around a

third of total construction activity) more than doubling from €9.5 billion in 2000 to €24

billion in 2006. The sector is also a major source of job creation with construction

employment currently standing at 280,000 with an additional 100,000 people working

indirectly in professions and sectors which serve the construction industry. While the

residential housing sector is currently going through a period of significant restructuring, the

outlook remains relatively optimistic, with other sectors, such as civil engineering (partly

linked to NDP infrastructure projects) and the repair, maintenance and improvement (RMI)

of private residences expected to show strong growth.

Assuming house construction and RMI was included in the definition of EGS, then its output

value was €25.5 billion in 2007.


55

The following Table sets out the key indicators for the sector.

Table 4.1: Construction Forecasts 2006-2008 (€billion) 73

2006 2007 2008

New housing 20 18 15.5

New Housing as % GNP 13.3% 11.2% 9.1%

Building 5 6 6.5

Civil engineering 4.5 5.5 6.5

RMI 6.5 7.5 8.5

Total output 36 37 37

Construction output as % GNP 24% 22.9% 21.6%

Source: Institute of European Affairs (forthcoming report on climate change), 2008

According to DSD Housing Statistics some 10,000 to 13,000 new housing units are expected

to be constructed in Northern Ireland over the next five years.

4.3.2. Drivers

As indicated elsewhere in the report, the regulatory framework acts as a key driver of

demand within the EGS sector. This is also the case in the building and house construction

sector. The regulatory framework in which construction activity takes place is focused on the

quality of buildings through the national Building Regulations, health and safety law,

environmental impact legislation and public procurement law. From 2007, and on foot of

the Energy Performance of Buildings Directive,74 the Building Regulations require any person

who commissions the construction of a new building with a floor area exceeding 1,000 m2 to

ensure, before work commences on its construction, that due consideration has been given

to the technical, environmental and economic feasibility of installing renewable energy

systems in the proposed building, and that the use of such systems has been taken into

account, as far as practicable, in the design of that building.

The main actions underway in the residential construction sector centre on a forthcoming

strengthening of the energy aspects of the Building Regulations, building on a previous

revision in 2002 and on the SEI House of Tomorrow Programme. It is estimated that current

and committed actions through the reform of the Building Regulations will result in

projected savings of over 13,600 GWh PEE in 2020. The introduction of building energy

rating for new (2007) and existing (2009) houses will provide an instrument that can be used

to raise awareness of energy performance and stimulate incorporation of such performance

into purchase decisions. The pace of building activity, as reflected in the housing stock

addition of recent years, contributed to a positive shift in average efficiency. For the same

standard of comfort and amenity, a new house today (2007) typically has a 70% lower 73

New housing refers to public and private residential development. Building refers to new private commercial and industrial development. RMI refers to the repair, maintenance and improvement of buildings (commercial, residential and industrial) and civil engineering. 74 Directive 2002/91/EC.


56

energy demand for space and water heating than its counterpart built 20 years ago.

However, since homes being built now will have a lifetime of at least several decades, it is

important to ensure that efficiency performance standards are robust.75 Building

regulations are important in setting the standard and driving performance improvements. A

typical semi-detached house built today and satisfying the 2005 Regulations would have a

Building Energy Rating (BER) of 155 kWh/m2. Year (a C1 house). With the 40% improvement

required to meet the 2008 Regulations this would mean it should have a BER of just over 90

kWh/m2. year (a B1 house). In order to keep pace with Europe, it is envisaged that a further

30% savings in energy and carbon emissions will be required with possible changes in 2011,

on top of the energy savings envisaged in the 2008 Regulations. The 2011 house would then

need to have a BER of less than 65 kWh/m2.year to meet the Regulations. This would mean

higher levels of insulation with U-Values for the opaque elements being not greater than

0.20 W/m2.K (though the method of construction should not change too dramatically).

Windows would, for example, be limited to 1.50 W/m2.K, which would mean that double

glazed windows with highly insulated glass would be the norm but triple glazing would not

be required.

While Building Regulations are determined by the Department of the Environment, Heritage

and Local Government (and amended at frequent intervals), construction product standards

are actually set at European level, and their free circulation is guaranteed under EU

Directives. 76

Another key driver is climate change. The built environment is a significant emitter of GHG,

both during the construction process and when in use. With existing technology, significant

savings can be made by introducing new products to the construction market and

incentivising new construction processes in order to extend the lifecycle of buildings.

Buildings are one of the five main users of energy in Ireland and account for some 34% of

TPER. Hence there is considerable interest in introducing measures to improve the energy

efficiency of buildings. However, it is claimed that market failure and behavioural barriers

are preventing a dramatic improvement. Emissions from the residential sector are

projected (in accordance with the ESRI-economy-wide model of energy demand) at some 6.8

Mt per annum on average over the Kyoto period (i.e. to 2012). This forecast builds in a

prediction that household numbers will rise from 1.33 million in 2003 to 1.74 by 2012 and

that the population will be 4.55 millions by 2012.77 While significant additions to the stock

have been recorded in recent years, some 50% of the current housing stock still pre-dates

1970. Improved thermal performance of new and existing buildings and continued fuel

switching from solid fuels to natural gas will be necessary to improve the sector’s overall

emissions’ performance.

75 All houses built today which are less than 125 sq metres must have floor area compliance certificates issued by the D/EHLG. Products used in the construction of new homes must have certification that they have a life of at least sixty years. 76 Directive 89/106/EEC. 77

Ireland’s NAP 2008-2012, page 7.


57

An absence of rigorous statistical information prevents a meaningful figure being given for

the current energy requirements of the construction industry. By way of illustration of the

current position, the Action Plan under Article 14(2) of Directive 2006/32/EC notes that

energy usage in the residential sector amounted to over 33,425 GWh (final energy

consumption) in 2005. Energy usage grew by 27% in the residential sector over the period

1990-2005 with the number of households increasing by 52%. Energy intensity (average

energy usage per household) decreased by 16% over the period reflecting an improvement

in energy efficiency of the housing stock, much of it due to higher efficiency standards of

new housing stock additions. Not all of the improvement in energy efficiency resulted in

lower energy usage, however, as higher standards of heating and comfort levels followed

from the deployment of central heating.

4.3.3. Barriers

The Irish quantity surveyors, Bruce Shaw, has recently carried out a major sustainability cost

analysis which has identified an initial extra capital cost of around 6% between conventional

office buildings and modern sustainable office buildings. The largest component of the extra

cost is in the building façade.78 As well as environmental gains, there are significant savings

in energy costs for occupiers of sustainable office buildings. The difference between a

sustainable office with a BER ‘A’ rating and a conventional air-conditioned office could be as

much as €20 per square metre per year. For a 25,000 square metre office, Bruce Shaw

calculates a potential saving of €500,000 a year. They also estimate that the extra cost of

the new Part L of the Building Regulations will add an extra €4,000 to €5,000 per dwelling

(but will provide savings of €350 to €450 per annum). Government estimates are twice this

figure. 79 Restrictive planning laws are in place in Northern Ireland in relation to micro-

generation.

While the Building Regulations involve the certification of compliance with the technical

requirements of the Regulations, the BER’s role is to determine the energy rating for the

building. The new BER has yet to be implemented but is expected to be in place by July

2009. In addition to its impact on the use of more energy efficient materials etc., the BER

also means that more robust inspection and monitoring of buildings during construction

will be required, ensuring that all relevant legislation has been complied with and that

construction products have been properly approved, i.e. shown to be 'fit for their intended

use'. Unless public authorities are resourced and trained as an immediate priority the

probability is that the new BER standards will not be implemented. In such an event, this

may affect the credibility of the government’s sustainability building strategy, in particular

the pace at which government intends to impose a ‘carbon neutral’ requirement on the

building and house construction sector. The problem is that an appropriate accreditation

process and labelling standard has not been specified for some products to be used in the

construction process to meet both Building Regulations and Floor Area Compliance

78 www.bruceshaw.ie 79

Department of the Environment, Heritage and Local Government, Regulatory Impact Assessment on Building Regulations Part L, December 2007.

http://www.bruceshaw.ie/


58

Certification requirements. An awareness and education campaign must be undertaken

preferably by a body such as the NSAI to promote the awareness of the requirement to

secure accreditation. The time delays associated with securing approval under the

accreditation process is far too long and will result in lost opportunities for suppliers of some

innovative products.

It remains to be seen if the Government’s new Enhanced Capital Allowance Scheme aimed

at promoting energy efficiency will have any impact – particularly on commercial/industrial

premises.

Progress on energy efficiency depends on people in the building industry being aware of the

importance of the issue, and then being able and willing to act on it. A Report by the World

Business Council includes the findings of a significant survey (of 1,423 respondents) about

professionals’ views on sustainable building issues.80 A considerable number underestimated

buildings’ contribution to GHG levels; awareness of environmental building issues was

relatively high, but only 13% actually got involved in the development of a sustainable

building; a significant body of opinion supported the view that developers and financiers are

the main barriers to more sustainable approaches in the building value chain. The main

conclusion, which admittedly has not been tested by Irish research, was that lack of

awareness is not the issue; the main barrier is a lack of in-depth understanding about the

impacts of global warming and a lack of leadership from the construction sector.

Unless the planning laws are changed it will not be possible to deploy some energy saving

equipment such as solar panels and micro-generation units that require installation on, or

outside, a building. The Minister for the Environment, Heritage and Local Government has

signalled that the planning laws will be changed to allow the installation of small renewable

units. 81

If new energy efficiency materials are to be deployed then construction product standards

reflecting higher quality products and a life cycle approach would need to be introduced as a

priority.

The inspection of construction projects will need to be undertaken in a uniform way

through the various stages of construction from foundations to roof. Guarantee schemes

operated by bodies such as Homebond provide structural warranties to new home owners

for up to ten years.

The regulatory situation in Northern Ireland about energy performance of buildings is

currently confused, with elements of the Code for Sustainable Homes being diluted.

80 World Business Council for Sustainable Development, Energy Efficiency in Buildings Project, 2007. The WBCSD is promoting the Positive Energy Building. 81 Statement to the Energy Summit, 6 March 2008.


59

4.3.4. Case Studies

There are numerous examples of best practice around Europe that Irish policy makers and

the construction sector could learn from. For example, ETAP (Environmental Technologies

Action Plan) is continuing its work on sustainable construction 82 and ERABUILD, which is a

strategic network for national R&D programmes from Austria, Denmark, Finland, France,

Germany, the Netherlands, Sweden, the UK, Switzerland and Norway, is actively issues

around the sustainable construction and operation of buildings. 83 In addition, PREB-AT is a

French-led international benchmark project dedicated to energy-efficient buildings. 84

PASSIVHAUS: AN EXAMPLE OF SUSTAINABLE DESIGN

Passivhaus, (a passive building) which began in Germany in 1991, has developed an approach that can

reduce the energy demands of a building to one-twentieth of the norm, but still provide comfortable

conditions. There are more than 6,000 buildings that meet the Passivhaus standard in Germany,

Austria, Switzerland, the UK and the US – offices as well as apartments and houses, and new and

renovated buildings. There are five key elements for a Passivhaus:

The envelope: all components should be highly insulated;

Airtightness; stop air leakages through unsealed joints;

Ventilation; use of a mechanical system with heat recovery so that hot air leaving the building

warms the cooler air coming in;

Thermal ‘bridges’: eliminate heat loss from poorly insulated points in windows, doors and

other parts of the envelope; and

Windows; minimize heat loss in winter and heat gain in summer.

The passive building requires the use of new construction products such as high quality thermal

insulation materials, advanced window technology, and high-efficiency electronically commutated

(ECM) motors. None of these products are available in Ireland.

Each building must fulfil strict (voluntary) requirements about energy use, air leakage, total primary

energy consumption and heat load that are much higher than most normal building codes. By

achieving Passivhaus standards, qualified buildings are able to dispense with conventional heating

systems. In Germany, as a consequence of the country’s first mover advantage, it is now possible to

construct passive buildings for the same cost as those built to normal building standards.

In Ireland, a typical house built to the passive building standard instead of the 2002 Building

Regulations would consume 85% less energy for space heating and cut space-heating related carbon

emissions by 94%.

82 www.ec.europa.eu/environment/etap 83 www.senternovem.nl. 84 www.prebat.net

http://www.ec.europa.eu/environment/etap

http://www.senternovem.nl/

http://www.prebat.net/


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KINGSPAN CENTURY

Ireland’s Kingspan Century has been awarded a €4m contract by the British Government in a project

to create 200 zero-carbon homes in the world’s most sustainable community near Bristol. The site is

the first to be identified under the UK Government’s Carbon Challenge. The UK intends to introduce a

mandatory zero-carbon standard in 2016. This project is therefore designed to demonstrate to the

building sector that the target is feasible and can be commercially viable. The contract win follows

Kingspan Century’s success earlier in 2007 when the company created the world’s most advanced and

sustainable home ‘Lighthouse.’ It costs just €50 a year to heat. The project will be a partnership with

developer Barratt Developments of Bristol, who will be using Kingspan’s (trademark) TEK Building

System. The high performance of the system is based on structural insulated panels which deliver very

high levels of thermal insulation and airtightness, thereby ensuring that high energy and sustainability

standards are achieved. The homes will also include solar panels for hot water; a district heating

system with combined heat and power; mechanical ventilation with heat recovery; greywater

recycling for WC flushing; and rainwater harvesting for washing machine and irrigation.

Ireland’s first eco-village is Cloughjordan in County Tipperary. 85 The Village will develop a

renewable energy district heating system, demonstrating ecological building. Each home will

be measured for energy use, and the whole process will be closely monitored to act as a

model of best practice in sustainability. This is an exemplar for other communities wishing to

use sustainable technology and processes. Many other examples of sustainable housing

development and initiatives exist. 86

4.3.5. Key Players

There are several large global construction companies specializing in sustainable building

and house construction and building materials companies who are not currently operating in

Ireland. 87 In addition, in the US there are many house builders specializing in sustainable

house construction that may be interested in investing in Ireland and/or creating JVs with

local builders if a major retro-fitting programme gets underway. 88

There is a growing indigenous sector, with many companies specialising in sustainable

construction (e.g. members of the Environmental and Sustainable Construction Association). 89

Members of the Irish Home Builders Association built the bulk of homes in Ireland. As new

products, technologies and building methods will be required as stricter BER and carbon

requirements are progressively introduced, it may be in the interest of those companies who

do not have sustainability construction know-how to form joint ventures with suitably

85 www.thevillage.ie 86

http://www.wwf.org.uk/sustainablehomes/links.asp 87 http://www.builderstate.com/Builders.html 88

http://www.ecobusinesslinks.com/sustainable_building.htm#Sustainable%20Builders%20General 89 http://easca.ie/content/view/13/29/

http://www.thevillage.ie/

http://www.wwf.org.uk/sustainablehomes/links.asp

http://www.builderstate.com/Builders.html

http://www.ecobusinesslinks.com/sustainable_building.htm#Sustainable%20Builders%20General

http://easca.ie/content/view/13/29/


61

qualified overseas specialist builders.


A report by the World Business Council for Sustainable Development points the way forward

for the building and construction sector. 90

The main driver is the fact that buildings are responsible for upwards of 40% of energy use in

most countries and there is an immediate requirement to introduce energy efficiency

measures and thereby reduce GHG emissions. The IPCC Fourth Assessment Report

estimates that by 2020 carbon emissions from building energy use can be reduced by 29% at

no net cost. This drive towards building energy efficiency will be minded of the finding of

the International Energy Agency that current trends in energy demand for buildings will

stimulate about half of energy supply investments up to 2030.91

1. View of the Construction Industry Federation 92

The CIF has noted that a tipping point has been reached in relation to the sector’s awareness

of climate change, sustainable development and environmental issues impacting on the

industry. The CIF has recommended to government that there should be a much higher

priority attached to achieving energy efficiency through the renovation of Ireland’s existing

stock of buildings and that the improved energy efficiency in new buildings should be

supported through enhanced capital allowances and appropriate tax incentives. The CIF also

called for a nationally coordinated policy of supporting innovation in the products and

services that will be needed to improve the energy efficiency of households and buildings

generally in Ireland. A potential bottleneck identified by CIF is the availability of skilled

public servants who will have responsibility for the strict implementation of the Building

Regulations and BER standards. The voluntary system of self-certification for compliance

with Building Regulations works well at present. What is required is that adequate resources

be deployed so that products and processes are standardised so that industry knows exactly

the products that can be sued in the construction process. Importantly therefore, the

construction sector is acutely aware of the challenges of climate change, but specifically that

new business opportunities exist.

2. Northern Ireland

A number of major studies in the UK have assessed the resource consumption (material and

water), waste and carbon emissions associated with both new housing programmes and

delivering improvements to existing housing stock and the opportunity exists to assess the

sustainability of the housing and infrastructure projections for Ireland. 93 94

90

World Business Council for Sustainable Development, Energy Efficiency in Buildings Project, 2007. The WBCSD is promoting the Positive Energy Building. 91 IEA World Energy Outlook, 2006. 92

Construction Industry Federation Annual Report 2007. 93 Stock Take. Sustainable Development Commission. July 2006. 94

Better Buildings - Better Lives: Sustainable Buildings Task Group Report. Sustainable Buildings Task Group. 2004.


62

3. Carbon Neutral Buildings

All new buildings could achieve an A1 BER by 2012 if the potential for significant energy

savings was pursued vigorously. However, even if the target date of 2012 could be met, the

cost of achieving A1 over A3 is considered prohibitive by the CIF in current market

conditions. The technologies, processes and know how to meet such a stretch target do not

exist in Ireland (or indeed in the UK) on the scale required. It has therefore been suggested

that until the construction sector has acquired these goods and services, a better focus

should be securing better energy efficiencies from the current building stock.

The whole concept of energy efficient sustainable design is in its infancy in Ireland and

mechanisms need to be put in place to encourage/require the design community to focus far

more on energy efficiency when designing new buildings. Large-scale retrofitting of existing

buildings should be supported so that the burden of reducing the energy demands of the

built environment is shared between new and existing buildings. The government has

committed to reviewing the Building Regulations in 2010 with a view to raising efficiency

standard from 40% to 60% on current levels. 95 The Minister for the Environment, Heritage

and Local Government has already signalled his intention to move to a zero emissions

standard, perhaps before 2016. This will require new building products and new processes

and a greater awareness among householders and commercial property owners and

tenants. The energy saving potential of buildings in the EU is estimated at 28%. There is

particular scope for savings in the public sector, where users of buildings do not always have

the incentive to use their energy efficiently. The government announced in June 2008 that it

is considering the imposition of higher energy efficiency standards for all new buildings,

regardless of size, from 2013 and provide incentives for the development of passive houses,

which rely on good insulation levels and passive heating and mechanical ventilation rather

than traditional heating systems.

Ireland should also consider introducing measures to raise the efficiency of energy

transformation, for instance by promoting Combined Heat and Power and district-heating

schemes in urban areas. With this in mind, the application of intelligent energy efficiency

and conservation systems and remote energy management in all building types should be

developed in order to support more energy efficient and energy saving patterns of building

use by occupants.

According to SEI, a combination of the following in the renovation of existing homes will

have the following impact:

Table 4.2: Cost of Renovating Existing Homes

Technology Private NPV

(€)

Social NPV

(€)

Total quantity

(MWh)

Present value

over lifetime

(€)

Exchequer

cost of

scheme (€)

95 The CIF’s Irish Housebuilders’ Associations has problems with this proposal.


63

Condensing

boiler

782 691 107 1892 370

CFL

435 464 6 525 30

Loft insulation 1135 1289 90 1315 60

Cavity wall

insulation

930 1006 95 1380 150

Source: SEI

What these figures demonstrate is that the progressive introduction of a Positive Energy

Building approach will require significant additional investment. According to SEI, it will cost

some €25,000 on average to retrofit a house to the highest energy standards, the cost to the

projected housing stock could be some €50 billion. This is probable the largest potential

opportunity for the EGS sector and one that should be given the highest priority. Measures

such as improved thermal insulation properties, lighting control, heat recovery on air

handling units, improved BMS, CHP, Biomass boilers will all add to the capital costs of

construction. As the regulatory compliance burden gets tighter, companies best positioned

to provide these energy saving construction products will reap the highest rewards. This

compliance burden will not be unique to Ireland as all member states will have to begin the

process of reducing GHG emissions from the built environment. Therefore Irish companies

with scale will have export opportunities.

In Northern Ireland, the Energy Savings Trust has schemes to assist with small-scale

renewables (heat pumps, turbines etc.).

4. Tax incentives

There is clear market failure in this sector. Consequently there are grounds for the

introduction of targeted and time-limited incentives to promote the wider use of energy

efficient goods and services. For example, consideration should be given to reducing that

rate of VAT on all suitably certified environmental goods that are used in buildings with the

aim of improving energy efficiency standards. The installation of smart meters should be

encouraged (once the current pilot project is completed) by subsidizing installation costs for

households below a certain income threshold. Grant aid for SEI’s ‘House of Tomorrow’

Programme should be increased and guaranteed over a five year period. Through SEI’s

Houses of Tomorrow Scheme, more than 6,000 houses have or are being constructed with a

40% improvement in energy efficiency. Finally, urgent consideration should be given to an

incentive package to encourage households and businesses retrofit their homes and

buildings.

5. Recycling of Construction Waste

The National Construction and Demolition Waste Council has been tasked to reduce waste

from the sector and to increase the content of recycled and recyclable material. 96 To date

however, no major new initiatives have been brought forward as CD waste is largely re-used

on site. The Council should therefore be asked to set specific targets and to indicate the

96 www.ncdwc.ie

http://www.ncdwc.ie/


64

business opportunities that may arise given the significant volumes (some 16.8m tones per

annum) of waste arising; by far the largest category of waste in volume terms in Ireland.

6. Biomass

The heating of buildings provide opportunities for significant energy savings, and

consideration should be given to the provision of support for the installation of biomass

heating in both new buildings and existing buildings. This in turn would require multi-agency

co-operation within the biomass heating supply chain and perhaps a new taxation regime to

support the efficient development of biomass crops in Ireland, and the development of

heating systems on an efficient and low-cost basis. This opportunity to will be examined in

more detail in the chapter on renewable energy.

7. New building materials

There is an opportunity for a developing Irish product market for the materials needed to

meet higher BER standards, and the expansion of the domestic industry when retrofitting of

the current housing stock becomes a legal requirement. A critical success factor to unlocking

the potential of the introduction of new products and services by the construction sector is

changing attitudes and behaviour.

The WBCSD has identified the following products that will be needed in buildings required to

meet the highest energy and building efficiency standards: ‘Low-E’ glass, energy-efficient

boilers, heat pumps, new insulation materials, lighting and appliances, and softwood

cladding. None of these products are manufactured on any scale in Ireland. 97

Over time all member states will be required to construct new buildings to A1 standards and

also to retrofit old buildings to the highest possible energy efficiency standard. Therefore

there is a significant export opportunity if Ireland could achieve first mover advantage in the

production and installation of a new generation of building materials.

8. Procurement

One of the keys to achieving the aim of sustainable building is to embed this requirement

through revised procurement rules. In the UK, the Sustainable Procurement Task Force

produced an Action Plan to deliver on the goal set out in the Government’s 2005 Sustainable

Development Strategy to make the UK a leader in the EU in sustainable procurement by

2009.98 The refitting of buildings was identified as a priority target. 99 Given that the public

sector in Northern Ireland is a much larger percentage of the economy than that of the UK,

the importance of public sector procurement in driving sustainability and the development

of the EGS sector is of even more vital importance. The integration of a Sustainable

Procurement National Action Plan for Northern Ireland, or indeed for the island of Ireland,

into the delivery of the Investment Strategy for Northern Ireland probably has the potential

to influence the development of the EGS sector more than any other single action.

97

Policy Directions to 2050, Energy and Climate, World Business Council for Sustainable Development. 98 Securing the Future - UK Government Sustainable Development Strategy, March 2005. 99

Procuring the Future, Sustainable Procurement National Action Plan: Recommendations from the Sustainable Procurement Task Force.


65

The greening of the construction sector in Ireland could be brought about by requiring

higher energy efficiency and building standards for all new public construction and building

works in the terms of public tenders.

9. Product Development R&D

Given the potential scale of Ireland’s retrofitting building programme, research and

development into products best suited for Irish circumstances should be explored.

4.3.7. Conclusions

The main driver of new business opportunity for the building and construction sector and

construction professionals is climate change. The WBCSD Report concluded, while

acknowledging the timing of market entry carries risk, that there will be considerable

opportunities for early entrants into the building energy efficiency business.

While a lead-in period will be necessary for the construction industry to develop new

products and processes in order to meet new standards of building performance and energy

efficiency, there is an undisputed trend towards higher standards of sustainability which

should not be ignored.

There is no incentive for individual companies to take a risk until there is clear regulatory

certainty concerning the government’s intentions about the introduction of tougher (and

fully enforced) building standards and energy efficiency.

The development of the construction products sector to anticipate much higher building and

energy standards should become a high priority for Ireland given the wide skills base of the

house construction sector and the service sectors that support it. New products will need to

be developed or deployed. New services, including BER verification, are emerging.

No state agency has a remit to develop EGS domestic opportunities for the construction

industry. Therefore, the key issue is who will take the lead to drive an sector-wide initiative

to quantify the opportunity arising from the enforcement of stricter BER and building

standards in Ireland and across Europe.

4.4. Cleaner Technologies and Processes

Products, systems and services which, by design: use resources from more sustainable

sources; transform resources to deliver same functions with less resources; transform

resources with less waste; and transform resources with waste designed to be recycled

effectively.


66

4.4.1. Introduction

This category (since it is not a sub-sector and cannot be considered as a sub-sector) requires

examination in a different way to the mainly media focused sectors (waste, air, water etc.)

analysed in this study.

While the issue of definitions of sub-sectors in the overall environmental goods and services

sector is problematic, within this category (or sub-sector), it is especially so. There is also the

issue of overlap with all other sectors, most especially consultancy and energy.

There have traditionally been many definitions of and synonyms to cleaner technologies,

such as cleaner production, clean technology, waste prevention, sustainable production,

dematerialisation, eco-efficiency, eco-design etc., but in loose terms cleaner technologies

and processes (CTP) can be defined as those that impact to prevent or reduce waste and

pollution at source. In this, they contrast with most environmental goods and services that

are end-of-pipe based, attempting to reduce the impact of the waste and emissions

produced after they have already been created e.g. recycling. In an Irish context, the Clean

Technology Centre has defined waste prevention for the EPA as: “elimination or reduction at

source of material and energy consumption, waste arisings (solid, gaseous, heat and liquid)

and harmful substances.” 100

Cleaner technologies and processes can have many forms and use various methodologies.

However these generally involve one or more of four changes: improved practices,

process/technology modifications, material substitution, and/or product modification.

Improved practices are sometimes categorised as involving housekeeping, operations,

maintenance or inventory procedures.101 The switch from products to services is another

important 5th dimension – this is a systems approach (based on Material Intensity Per

Service (MIPS)).

In most studies on environmental technologies the quality of the environmental goods and

service, and the extent or nature of its impact on the environment (such as those from CTP)

are not considered separately. 102 The OECD has taken the approach to include clean

technologies in the more ‘general’ quantification approach and to be very wary of separate

quantification. According to the OECD, eco-industries “include clean technologies where

pollution and raw material use is being minimised... These technologies need to be

considered as part of the industry, despite definition and measurement problems. Cleaner

technologies are difficult to measure because improvements which are less polluting cannot

100 Coakley, Tadhg and Cunningham, Dermot Assessment and Development of a Waste Prevention Framework for Ireland EPA, 2003. 101 Duffy, Noel and Coakley, Tadhg Waste Prevention Guide for Industry and Business Limerick Clare Kerry Regional Waste Management Office, 2006. 102

OECD The Global Environmental Goods and Services Industry OECD 1995; Ernst and Young. Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU. European Commission DG Environment, Brussels, 2006; Coakley, Tadhg et al. Investigation into why existing environmental technologies are underused in Ireland EPA, 2007.


67

be separated from general improvements which are more efficient, use less resources and

produce less waste or harmful byproducts.”103 The point here is that, if a company decides to

run an efficiency programme and to improve energy efficiency due to a change in practices,

it would come under the heading cleaner technologies and processes, as well as increased

general industrial efficiency (which may need to be considered in another study), as well as

energy management (covered elsewhere in this study).

For their recent quantification of eco-industries in the EU, Ernst & Young has taken the

approach to look at two types of activities: pollution management and resource

management. 104 “The main difference between the two types of activities is that pollution

management typically relies on end of pipe-technology while resource management is

associated with preventive approaches of integrating environmental issues. The “Cleaner

Technologies and Products” are included in the pollution management aggregate, however.

This seems strange, as by any definition, the CTP category should be associated with

preventive approaches, i.e. resource management. Another issue regarding the

quantification of this category is the fact that it is clear that cleaner technologies and

processes are already included in the other sectoral reports in this study and to re-quantify

them separately and additionally could give a false impression of the overall EGS sector.

However, since, in relation to environmental impacts, climate change and carbon footprints

etc. cleaner technologies and processes have a vital role, it is nevertheless worthwhile that

they should be considered and examined separately. Not for quantification purposes, but

rather so they can be given priority over other end of pipe environmental goods and

services, in accordance with Irish and EU environmental policies as well as global necessities.

4.4.2. The Cleaner Technologies and Processes Sector

In one UK study where CTP are considered separately, they are defined slightly differently

than in this report as follows: 105 “The supply of equipment and expertise for cleaner, more

resource efficient technologies, processes or products, which for example, decrease material

inputs, reduce energy consumption, recover valuable by-products, reduce emissions or

minimise waste disposal problems - usually involving minimising polluting emissions at

source rather than adopting 'end-of-pipe' pollution control techniques (JEMU, 2002).” 106

That study did go on to quantify CTP, not using its own research but that from another

study, carried out by URS into expenditure spent by industry on environmental protection in

the UK. However, since they did not specifically exclude this type of technology from the

other industries they considered, there may have been ‘double accounting’ or overlap in

103 OECD The Global Environmental Goods and Services Industry OECD 1995 page 4. 104 Ernst & Young, 2006. Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU. European Commission DG Environment, Brussels. 105 Department of Trade and Industry (DTI) study Emerging Markets in the Environmental Industries Sector, November 2006. 106 JEMU, 2002, Global Environmental Markets and the UK Environmental Industry.


68

that case. 107 However, no such study has been carried out in Ireland to make a comparative

analysis or to quantify the spending on CTP in Ireland and insufficient data are available to

make definitive estimates of the value of this sector in Ireland. An Irish study, similar to the

URS one carried out in the UK, would be worthwhile to estimate the size of this ‘sector’ in

Ireland.

In the URS study, the figures for CTP are for the extraction, manufacturing and energy and

water supply industries only, i.e. they do not include construction or service industries or the

public sector. They also include capital expenditure only, not operational costs. The CTP

market specifically used in the DTI study (reference 6) is defined as follows:

“Capital expenditure on integrated processes relates to new or modified production facilities

designed to integrate environmental protection into the production process. This might

include adaptation of an existing installation/process whereby the integrated expenditure is

then the total purchase cost of the adaptation. It also includes installing a new process in

which the design takes environmental protection into account and in this case the

expenditure counted is only the extra cost compared with installing a ‘dirtier’ alternative.”

The market for CTP in the UK was estimated at £177m for 2005, which extrapolates to a

Northern Ireland market of £11.9m, growing to £285m by 2010 and on to £459m by 2015.

Those estimates now appear to have been on the low side, given that a more recent study

has indicated that by 2005 the actual figure for the UK was £515m – a massive growth of

almost 200% in two years. 108 The breakdown of these technologies on a sectoral basis is

interesting: 50% was spent on water, 28% on air, 11% on other, 3% on solid waste, noise and

nature protection and 2% on soil/groundwater – notably this appears to exclude energy

which would be another considerable fraction and which would greatly increase the overall

figure. These may or may not be indicative for Ireland, and a separate examination on CTP

in Ireland, while merited, is not within the remit of this report.

Given the distinctions and caveats above, since the UK DTI estimate for all environmental

goods and services was £25 billion for 2005, this CTP element comprises about 2%. This is

considered to be a major underestimate by experts in the field consulted during this present

study. The reasons for this underestimate include the limited scope of the sectors, the

limited definition and failure to accurately predict the market (especially relating to energy)

given the measures in place relating to climate change etc.

Industry feedback suggests that Ireland should focus more and more on CTP and away from

end-of-pipe technologies as this could be a niche market and have eventual export potential.

107

URS Environmental Protection Expenditure by Industry: 2003 UK Survey DEFRA 2005. 108 URS Environmental protection expenditure by industry 2005 survey DEFRA 2007.


69


The main regulatory driver supporting CPT in Ireland is Integrated Pollution Prevention

Control (IPPC) which was set up in Ireland under the EPA (Licensing) Regulations 1994 and in

Northern Ireland under The Pollution Prevention and Control Regulations (Northern Ireland)

2003. The categories of industry coming within the scope of IPPC licensing in Ireland are:

Minerals and Other Materials.

Energy.

Metals.

Mineral Fibres and Glass.

Chemicals.

Intensive Agriculture (poultry and pigs).

Food and Drink.

Wood, Paper, Textiles and Leather.

Fossil Fuels.

Cement.

Waste (recovery or disposal in a facility connected or associated with an IPPC activity).

Surface Coatings.

Other Activities (includes testing of engines, manufacture of printed circuit boards,

production of lime in a kiln and manufacture of ceramic products).

Prior to the advent of the IPPC system for industry and waste management, each

environmental medium was separately controlled by different legislation, which resulted in

so-called single media licensing. This single media approach is still the case for all non IPPC

licensed companies (i.e. the vast majority of industry in Ireland) which means that the

regulatory framework, for the most case, is not supportive of companies using cleaner

technologies and processes, but rather drives them towards end-of-pipe technologies.

The focus of single media licensing is on emission limit values (ELVs). The classic water

pollution control license barely consisted of more than a table of emission limit values for

parameters relevant to the operation and the related monitoring and reporting

requirements. The focus of compliance was the attainment of these ELVs, without

consideration being given to the cross media effects in terms of increased emissions to other

media or the additional consumption of energy and resources in achieving these limits or the

lack of innovation of the technology, or the quality of its results in relation to other

technologies. As a consequence, the market to date has been dominated by EOP

technologies to meet these ELVs, but there are now indications that this could be changing

(albeit slowly).

Apart from IPPC licensing, other environmental legislation in the Ireland such as, for

example, the Waste Management Act and the Packaging Regulations (packaging nature and

use requirements), do have scope for an emphasis on prevention at source options, but for

the most part these possibilities are not being implemented.


70

A key driver will be the climate change agenda and the adoption of targets for reductions in

GHG emissions from domestic and commercial buildings in Northern Ireland. The UK Climate

Change Bill has just received parliamentary approval at Westminster. However, it is

currently unclear if Northern Ireland will be included in its target of a 60% reduction in

carbon emissions by 2050.

The growth of wastes and emissions, year-on-year in Ireland, shows clearly that there is

generally not a strong emphasis of waste prevention and cleaner technologies in Irish

legislation.

4.4.4. Trends

As in the UK, it is expected that there has been a growth in the use of CPT in Ireland and this

is expected to continue, especially relating to energy. The implementation of IPPC certainly

had an impact on the large scale industrial sector in Ireland and may have pushed it (at least

initially) towards best available technologies and away from emission level values in

licensing.

However, as some studies have shown the uptake of prevention-based approaches among

local authorities, public bodies and SMEs in Ireland still leaves a lot of room for

improvement. 109

Within the energy sector in particular it is expected that growth in renewable energy and

improved energy management systems will continue but that is covered in those sub-

sectors. Regarding solid waste and material flows within Ireland, the most recent EPA waste

data show that arisings continue to grow, implying that waste prevention measures and

supports require further boosting and resources. There is no doubt that greatly improved

recycling and waste management has taken place over the past 10 years, but with regard to

prevention and the use of cleaner technologies, the extent of change has not been as great.

However, these trends are now being influenced by the drivers listed below and new policies

that are coming on stream. If we consider the current construction energy efficiency

requirements, the Solvent Regulations implementation Accredited Inspection Contractor

(AIC) scheme, more intensive packaging regulations, etc., an opportunity to greatly improve

the uptake of CPT could be further enhanced.

4.4.5. Drivers

As mentioned above, IPPC licensing has been a driver for the relatively small number of

companies affected. By 2007, the EPA had issued over 650 IPPC licenses. This legislation

109

Coakley, Tadhg and Cunningham, Dermot Assessment and Development of a Waste Prevention Framework for Ireland EPA, 2003; Review of regional waste management plans, prevention elements, by Clean Technology Centre; Review of implementation of prevention element of 1

st Irish National Hazardous Waste Management

plan by Clean Technology Centre.


71

requires compliant companies to implement best available technologies (BAT).

As also mentioned above climate change and its impacts on policies and regulation will drive

cleaner technologies and processes. At a European level, the latest proposals to amend to

the Emissions Trading System (ETS) require Member States to reduce GHG emissions to at

least 20% below 2005 levels by 2020 and for 20% of energy consumption across the EU to

come from renewable sources by 2020. End of pipe technologies will not be sufficient to

achieve such targets.

Since 2004, the EPA has been implementing a National Waste Prevention Programme

(NWPP).110 This includes several elements, with the aim of reducing waste production in

Ireland and boosting waste prevention and clean technologies. One of its main national

programmes is the Local Authority Prevention Demonstration (LAPD) Programme.111 This has

two phases at present, with €1.2 million financial assistance for phase 1 and €500,000 for

phase 2. The aim of the programme is to develop capacity and set up networks to support

clean technologies within local authorities and to create demonstration examples of the

implementation of such technologies at the local level.

Another initiative of the NWPP is the Green Business Initiative (GBI). While still at an early

stage, the GBI aims to support SMEs in the take up of clean technologies. One of its first

programmes is the development of the www.greenbusiness.ie website which aims to create

a detailed information resource regarding clean technologies in Ireland, along the lines of

the UK ENVIROWISE system.

The EPA also launched the Cleaner Greener Production Programme (CGPP) in 2001 as a

grant scheme to encourage Irish organisations to implement cleaner greener practices. 112 To

date the EPA has committed €3.7m to 59 organisations that have received co-funding for

demonstration projects under this programme over three phases. Phase 4 of the programme

was launched in March 2008 with a view to providing a further €2 million to Irish companies

who implement cleaner technologies.

Another grant aid scheme to support environmental technologies and eco-design has been

set up by Enterprise Ireland, providing financial aid to companies that wish to assess their

potential for the development of environmentally superior products (ESP). Enterprise

Ireland is also offering assistance to companies who wish to improve their eco-efficiency by

providing them with a World Business Council for Sustainable Development (WBCSD)

assessment procedure.

There are two national training programmes relating to cleaner technologies and processes.

The Foundation Course in Environmental Management, facilitated by IBEC, provides training

on cleaner production which is given by the Clean Technology Centre. The LAPD training

110 www.epa.ie 111

www.ctc-cork.ie/lapd 112 www.cleanerproducition.ie

http://www.greenbusiness.ie/

http://www.epa.ie/

http://www.ctc-cork.ie/lapd

http://www.cleanerproducition.ie/


72

programme, developed by the Clean Technology Centre and the EPA, is provided to local

authority personnel and is aimed at capacity building within that sector in the field of clean

technologies and processes.

As part of the local and regional Waste Management Plans, local authorities are obliged to

implement waste prevention procedures at the local level. All these plans contain

commitments to waste prevention, to some degree or other, as did the first generation of

plans. Many of the current phases of plans have committed to create the local authority post

of Green Business Officer who will have the role of engaging with industry and organisations

in that region in order to prevent waste and increase uptake of cleaner technologies. Some

local authorities have already taken this initiative and the Limerick Clare Kerry Regional

Waste Management Office has been notably active in this regard for a number of years. 113

4.4.6. Weaknesses

Despite the initiatives and drivers outlined above, CTP is still a relatively new and untested

means of environmental protection for most companies and organisations. While the lock-in

to traditional technologies is preventing a wide scale uptake of environmental goods and

services in general, this lock-in is especially damaging to any potential uptake in innovations

such as cleaner technologies.

Despite the drivers listed above and recent improvements, there is still a widespread

ignorance in business and organisations of the subject of clean technology. While the

training programmes and initiatives described above are welcome, they are not sufficient to

create a culture of cleaner production in Irish society. Uptake in this method of

environmental protection requires knowledge and consideration of the complete product

life cycle chain and this knowledge is not yet common in Ireland.

There is still insufficient pressure from legislative, economic and policy drivers in Ireland (at

national and local levels) for companies to consider cleaner technologies on a widespread

scale. Without intensification of these major drivers, this area of the EGS sector will not

develop widely and a major opportunity will have been lost.

4.4.7. Case Studies

Northern Innovations114

Northern Innovations was founded in 2006 to provide process and product development,

consultancy and engineering design, focused mainly on manufacturing and industrial clients such as

3M, Seagate, Shorts. More recently the company has been providing these services or Invest NI and

the Carbon Trust.

113 www.managewaste.ie 114 http://www.northerninnovation.com/

http://www.managewaste.ie/

http://www.northerninnovation.com/


73

One of the key companies to engage in the sub-sector consultations, Northern Innovations is a

Northern Ireland based technology and process innovation company which illustrates the

interdisciplinary nature of the clean technologies and processes sector. The company provides an

internationally experienced, entrepreneurial, resource to customers, to enable them to better

exploit their ideas, products and processes, focussed on the following areas:

Outsourcing

Product Design and Development

Process Design and Development

Research and Development

Project Management

Mentoring

Northern Innovations has been established to fill the gap caused by many organisations reducing

their spending or out-sourcing their in-house capability for process design and development and

R&D.

Northern Innovations limited is a market driven technology transfer company that enables

individuals and businesses to rapidly acquire innovative technologies by leveraging all available

internal and external skills, whilst also bringing a close liaison with established Universities,

Government Agencies and Research Institutions

Schiedel Storey High Chimney System

Schiedel, an Austrian company based in Co. Monaghan has as its core business the production of

chimney systems. 115 The Schiedel Swift chimney system is a versatile product that was developed to

suit the open fire and central heating requirements of the UK and Irish markets. Prefabricated

chimney systems have been an important feature in the European construction industry for many

years. Traditionally this has not been the case in Ireland and the UK where chimneys have been

constructed on site with components supplied by different manufacturers.

With financial support from the CGPP programme, Schiedel aimed to develop a new ‘Storey High’

modular chimney system to replace the current Swift Chimney System components - basically

supplying the chimney in assembled modular sections rather than in kit form.

For the new three piece ‘Storey High’ chimney system each of the three sections was designed,

prototyped, cast, tested by external organisations (Schiedel’s German Laboratory and Queens

University Belfast) as well as site tested, and introduced to production. Various transportation

cradles were produced by a supplier and tested. The weight of the cradles was reduced by 15% over

the course of being developed. A key measurement is that the new chimney system can be installed

in 1.5 hours compared to 8 hours for the current Schiedel Swift Kit system.

The product was installed and tested in a variety of sites around the country. There were open days

held for building contractors at both the factory and on building site demonstrations. The new

115 From 2 page summary of CGPP project at www.cleanerproduction.ie

http://www.cleanerproduction.ie/


74

system is factory assembled which increases the quality and accuracy of construction and reduces

the amount of materials needed per unit. The new system also results in a reduction in chimney

installation times for builders.

The financial and environmental benefits per annum of implementing this cleaner technology are

shown in the two tables below:

A LIFE ENVIRONMENT construction project demonstrates the use of building materials derived

from renewable raw materials116

This integrated and sustainable demonstration building has especially low energy consumption, with

an energy demand half that of a standard passive house.

The LIFE S-HOUSE project was carried out in the context of the Austrian "Building for Tomorrow"

programme for the development of greener buildings. It addresses the issue of building waste by

making use of as much renewable material as possible, mainly straw and wood. During the project,

the properties of walls made of straw bales were tested and validated for fire, humidity and sound

absorption. Walls consist of straw bales covered in clay with no intermediary film, plus a wooden

facade. Screws used to build the walls are made from a bio-synthetic material and have been

specially designed and optimised. Floors and ceilings also have straw elements in order to create a

continuous straw shell for the entire building, which provides optimum heat insulation. Since the

completion of the building, the building components and materials have been monitored in order to

assess their properties over time.

Additional energy efficiency features of the building include its large glazed south-facing facade that

captures heat, with a ventilation system that distributes it around the house, and a biomass storage

stove. Stone paving on the ground floor acts as a heat retainer.

All these features make the S-HOUSE an integrated concept of sustainable building. It now serves as

an exhibition centre promoting the use of renewable raw materials and sustainable building

116

From case studies in environmental technologies on ETAP website: http://ec.europa.eu/environment/etap/technologies_en.htm

http://ec.europa.eu/environment/etap/technologies_en.htm


75

technologies.

S-HOUSE: facts and figure:

1. 'Factor 10' concept successfully implemented: the consumption of resources was minimised

10 fold compared to conventional solutions.

2. The building requires as little as 6kWh/m² per year for heating purposes - passive houses

have to consume no more than 15 kWh/m² per year and standard buildings can consume

up to 180 kWh/m² per year.

3. The project was rewarded with several prizes worldwide: Global 100 Eco Tech Award, Expo

2005 Japan; Energy Globe Vienna; Meilenstein, Dr. Erwin Pröll Zukinftspreis 2006; RIO

Award, Innovationpreis 2006; Austrian national award for Architecture and Sustainability

2006; Best of the Best LIFE Environment Projects 2006.

Roche Ireland eliminates production step117

Roche Ireland Ltd., in Clarecastle, Co. Clare, manufacture active pharmaceutical ingredients. A better

understanding of their process dynamics has resulted in the elimination of an intermediate isolation

step. This has significantly reduced the amount of solvent and energy used and the amount of waste

generated.

A non-process example of waste minimisation is that they have moved from a time-based to a

condition-based maintenance strategy for all lubricants used on site. This involves regular analysis of

lubricants to determine effectiveness, and then replacement is carried out as required.

For hydraulic oil used in centrifuges alone it has reduced consumption from 1000 gallons/year to

250 gallons every 3 years, i.e. a 92% reduction with a saving of €9,000/year.

4.4.8. Barriers

There are many barriers in Ireland to the creation and usage of cleaner technologies and

processes. Some are developed in the weaknesses section above. Many others, relating to

EGS in general but which also apply to CTP, were described in another Irish study on the

uptake to environmental technologies in 2007.118

Several barriers specific to CTP were pointed out in one study of 2003 relating to waste

prevention.119 While some of these have been overcome since then, many others remain,

including:

117 Duffy, Noel and Coakley, Tadhg Waste Prevention Guide for Industry and Business Limerick Clare Kerry Regional Waste Management Office, 2006. 118

Coakley, Tadhg et al. Investigation into why existing environmental technologies are underused in Ireland EPA, 2007. 119

Coakley, Tadhg and Cunningham, Dermot Assessment and Development of a Waste Prevention Framework for Ireland EPA, 2003.


76

Lack of priority and resources in society – especially at national and local government

levels

Throwaway society – no externalities in real full costs of technologies and products

Low levels of awareness – especially in SMEs

Lack of sufficient research

Lack of sufficient information provision, education and training

Lack of green public procurement

Insufficient economic instruments to support reduction at source over end-of-pipe

Insufficient legislative support for CPT – IPPC type licensing not sufficiently widespread

Design for disposal – products not designed to last or to be repaired

Another barrier pointed out by one expert in Northern Ireland was the skills shortage in the

areas of CPT related engineering, product and process design and optimisation required to

support manufacturing and industrial clients.


Ireland, as a knowledge-based economy, has an opportunity to develop the skill and

expertise related to CTP and go beyond end-of-pipe technologies. Some knowledge already

exists and this can be further nurtured and developed. The successes of EPA and Enterprise

Ireland programmes can be built upon if resources and time are invested in this area of EGS.

Climate change policies and programmes can enhance take up of CTP over the coming years.

With widespread concern about climate change and Ireland’s difficult Kyoto-related targets

on carbon emissions, now is an excellent time to develop awareness of CTP in industry and

society. Further economic instruments can be initiated to support this area of EGS. Simple

legislative pressures can be applied to boost SME and public body uptake of CTP and to aid

Ireland in catching up with other EU Member States such as Denmark, Austria and

Netherlands in this field.

CTP is also an area where there could be spin off benefits to already developed sectors in

Ireland such as, for example, Information and communication technology (ICT). New

products with potential for less demand on energy and materials will often need such ICT

hardware and Ireland has a leading edge in this area. Software development could also be

another spin off and again Ireland is well placed to provide software solutions to product

and service developers. Nanotechnologies is another growth area in this sector, with further

potential to support other sectors such as monitoring and Ireland has developed expertise in

this field at University and Institute of Technology level as well in the private sector.

Some areas of growth potential, noted particularly in Northern Ireland are:

Supply chain analysis for materials and energy/carbon efficiency

Research and Development

Process optimisation


77

Product design

Northern Innovations is a case to point. They have identified a market opportunity from

companies who have closed down their R&D units but who now need R&D consultancy

support.

Other areas of growth potential and opportunity include:

• RES - E consultancy

• Other consultancy

• Energy management consultancy

• Resource efficiency

• Water efficiency

• Energy efficiency and renewable energy sources

• Training, export potential in particular

4.4.10. Conclusions

Ireland has a poor record with regard to CTP, but from a standing start, successful

programmes from the EPA, Enterprise Ireland, Invest NI and the Carbon Trust can now

be built upon.

This will take political and administrative commitment and foresight. It is not enough for

Ireland to grow its EGS sector with end-of-pipe technologies that do not sufficiently aid

our environmental protection or long term economic growth.

Key drivers for the sector are energy and raw material costs, as well as climate change

pressures.

Opportunities for development of the sector are limited by a skills shortage, particularly

in engineering.

Some knowledge gaps could be addressed through the EPA Science, Technology,

Research and Innovation Programme (STRIVE) and other Research Programmes. The

extension of the SFI research programme to include energy matters will enhance the

CTP knowledge and business potential and this is welcomed. SEI’s continued R&D

supports for renewables and energy efficiency should be continued and expanded.

Several worked demonstration examples and capacity building developments are now in

place through the CGPP, LAPD and ESP programmes and the activities of the National

Waste Prevention Programme of the EPA has led to significant improvements in CPT

knowledge and uptake in Ireland in recent years. These need to be further developed,

extended, and continued to develop capacity further and increase demonstration levels

to a critical mass. The Enterprise Ireland Environment and Green Technology

Department’s recent expansion of its financial environmental supports for SMEs should

also focus on CTP rather than end of pipe solutions. Local authorities are especially well

placed to intensify diffusion of CTP at a local level and adequate resources and training

of their staff should be a priority.


78

We need capacity building, training, demonstration and subvention to reduce risk with

innovations and these drivers need to apply over several years.

If we want to ensure sustainability and economic stability in the future, it is necessary to

focus on CTP and to emphasise preventive based solutions over end-of-pipe technologies.

This can be done by some of the following actions:

Widespread training and awareness raising programme in SMEs and public bodies

relating to clean technologies.

Economic supports and subventions to create incentives to push industry and society

away from end-of-pipe solutions to environmental pressures, both from push and pull

perspectives.

Large scale demonstration programmes involving hundreds of millions of Euro to

support current CGPP, EPS, LAPD, Green Business and other programmes.

Development of the legislative structure to support a mini-IPPC licensing system for

SMEs and other innovative regulations.

Change in focus of waste and packaging related legislation from recycling to prevention.

Compulsory large scale green procurement backed by legislative and information based

supports.

4.5. Energy Management/Efficiency

Products, systems and services for energy management and energy efficiency. Examples

include energy consultancy/audits, building energy management systems, energy efficient

products and efficiency advice. This sub-sector may also include Environmental Monitoring,

Instrumentation and Analysis activities specific to this sector.

Energy efficiency in the construction sector is dealt with in the section on building and

construction. There is also considerable scope for overlap between this sector and the

cleaner technologies sector, for example energy efficient products may be labelled as clean

technology (as has been the case with the US venture capital activity) and there may also be

some overlap with the renewable energy sub-sector. This section will therefore concentrate

on building energy management systems and the service provision of energy

consultancy/audits /advice.

4.5.1. Introduction

At Ireland’s first Energy Forum, held on the 6th March 2008 the Taoiseach, announced that

€200 million was earmarked to be spent on energy-related Research and Development over

the next five years. At the same Forum, the Minister for Communications, Energy and

Natural Resources stated that “energy efficiency is the least expensive and most intelligent


79

means of making substantial cuts in our fossil fuel bills and greenhouse gas emissions.

Initiatives such as smart metering, building improvements and peak demand reduction will

benefit the Irish economy to the tune of €3.6 billion. Notably, they will reduce our carbon

emissions by over 6 million tonnes.”

4.5.2. The Energy Management and Auditing Sector

In the 2008 Finance Bill, the Irish Government outlined plans to offer tax incentives aimed at

supporting investment in new energy saving equipment purchased by businesses. The

incentives apply to the purchase of Building Energy Management Systems (BEMS). BEMS is

the "brains" of a building, a high technology system installed in buildings that controls and

monitors the building's mechanical and electrical equipment such as heating, ventilation, air

conditioning and lighting systems.120 The new scheme allows businesses to write-off the

cost of purchasing a BEMS against taxable profits in the year of purchase.

The significant players in the Irish building management systems (BMS) market are Cylon

Controls, Trend Controls (part of Honeywell), Siemens, Johnson Controls, TAC (a Schneider

Electric company) and Comeragh Controls. The market for BMS hardware and software has

been estimated by one of the key companies operating in the sector as €20m and represents

10-20% of the overall investment in heating, ventilation, air conditioning etc.

The energy auditing sector is dominated by Sustainable Energy Ireland (SEI) and the energy

provider, ESB Independent Energy. A number of niche consultancies are established,

including Hyperion Ltd., Callaghan Engineering, and Irish Energy Management Ltd. A search

of the Kompass Directory under the key words “energy audit” yielded ten results.121 It is

clear many consultancies will extend into this area as financial opportunities present

themselves. SEI had 45 applications in 2007.

The Building Energy Rating (BER) Scheme has created an opportunity for independent

inspection and rating for the predicted 45,000 new-builds in 2008 (according to the IHBA)

and for existing dwellings placed on the market (for rent or sale) from 1 January 2009. 122 123

There are 471 assessors currently registered with SEI to issue BER Certificates in accordance

with the EC Energy Performance of Buildings Regulation 2006 (S.I. No. 666 of 2006). 124

In its 2008 study, “Demand side management in Ireland – evaluating the energy efficiency

opportunities”, Sustainable Energy Ireland identified energy efficiency savings potential by

sector and technology:

120 http://www.cylon.com/news.php?id=28 121 www.kompass.ie 122

http://www.independent.ie/national-news/shortfall-in-newhome-construction-may-push-prices-back-up-1314098.html 123

http://www.sei.ie/index.asp?docID=-1&locID=1184#5 124 http://193.178.2.42/SearchAssessors.aspx

http://www.cylon.com/news.php?id=28

http://www.kompass.ie/

http://www.independent.ie/national-news/shortfall-in-newhome-construction-may-push-prices-back-up-1314098.html

http://www.independent.ie/national-news/shortfall-in-newhome-construction-may-push-prices-back-up-1314098.html

http://www.sei.ie/index.asp?docID=-1&locID=1184#5

http://193.178.2.42/SearchAssessors.aspx


80

Figure 4.1: Energy efficiency savings potential by sector and technology

Source: SEI “Demand side management in Ireland – evaluating the energy efficiency opportunities”, 2008

With further consideration of peak demand savings, again by sector and technology:

Figure 4.2: Peak demand savings potential, by sector and technology


Lighting and heating (space and water) are striking in their significance, with appliances also

relevant in the residential sector and motors in the industrial. The following key measures

to achieve greater energy efficiency have been identified by SEI:


81

Table 4.3: Residential key measures by building status and fuel

Market Fuel Key Cost-Effective Measures

Existing

Homes

Electric Compact Fluorescent Lamp (CFLs), energy efficient floor lamps,

proper sizing of Central Air Conditioning, high efficiency appliances,

towel warmer timers, low flow measures, tank wraps, ceiling

insulation, ceiling and wall insulation, duct diagnostics and repair

Existing

Homes

Oil and Gas Condensing boiler, ceiling insulation, duct insulation, duct repair,

Heating Ventilation and Air Conditioning (HVAC) diagnostics &

repair, programmable thermostats, water heater blankets, high-

efficiency water heaters, low-flow showerheads

New

Construction

Electric CFLs, energy efficient floor lamps, proper HVAC sizing, high-

efficiency water heater, high efficiency clothes washer, high

efficiency dishwasher, pipe wrap

New and

Existing

Homes

Oil and Gas High-efficiency appliances, water heater blankets, programmable

thermostats, low-flow measures, tank and pipe wraps, ceiling

insulation, high-efficiency and condensing boilers, HVAC and duct

diagnostics and repair

New

construction

Oil Condensing boilers, high efficiency water heaters


Table 4.4: Commercial key measures by building status and fuel

Market Fuel Key Cost Effective Measures

Retrofit Electric Premium T-8s, High Bay T-8s, CFLs, occupancy sensors, High Intensity

Discharge (HID) lights, HVAC tune-up diagnostics, HVAC proper

installation, high-efficiency AC, motors, Variable Speed Drives (VSD),

exit signs, LED signs

New

Construction

Electric Premium T-8s, High Bay T-8s, CFLs, occupancy sensors, High Intensity

Discharge (HID) lights, HVAC tune up diagnostics, HVAC proper

installation, high-efficiency AC motors, Variable Speed Drives (VSD),

exit signs, LED signs

Existing and

New

Construction

Gas High-efficiency boilers, duct insulation, tune-up diagnostics, infrared

cooking appliances, pipe insulation, ceiling insulation, low-flow

fixtures, high-efficiency water heaters, zone time and temperature

control.

Retrofit Oil Double-glazed windows, high-efficiency boilers, high-efficiency water

heaters, heat-recovery systems, stack heat exchanger, Energy

Management System (EMS) installation

New

Construction

Oil High-efficiency boilers, heat recovery systems, high-efficiency water

heaters, high-efficiency pool heater, pool cover, instantaneous water

heater, zone time and temperature control



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Table 4.5: Industrial key measures by building status and fuel

Market Fuel Key Cost Effective Measures

Retrofit Electric Premium T-8s, High Bay T-8s, CFLs, occupancy sensors, High Intensity

Discharge (HID) lights, HVAC tune-up diagnostics, HVAC proper

installation, high-efficiency AC motors, Variable Speed Drives (VSD),

exit signs, LED signs, pumps, compressed air, Clean room measures,

process measures

Existing Gas High-efficiency boilers, duct insulation, tune-up diagnostics, infrared

cooking appliances, pipe insulation, ceiling insulation, low-flow

fixtures, high-efficiency water heaters, process measures, zone time

and temperature control

Retrofit Oil Double-glazed windows, high-efficiency boilers, high-efficiency water

heaters, heat-recovery systems, stack heat exchanger, Energy

Management System (EMS) installation, process measures


Each of these represents a potential market opportunity, as many of the specific goods are

not currently manufactured in Ireland.


The Kyoto Protocol set clear targets for Ireland in relation to its GHG emissions; targets we

have not achieved. Ireland is now faced with major reductions post-Kyoto i.e.post-2012,

which will be even greater if a subsequent international agreement on climate change can

be reached. Directive 2006/32/EC on energy end-use efficiency and energy services (ESD)

required Member States to submit an action plan in 2007 setting out how they will achieve

energy efficiency savings of 9% by 2016 (excluding businesses within the EU Emissions

Trading Scheme, aviation sector and marine bunker fuels). However, the European

Commission Communication “An Energy Policy for Europe”, 2007 included the sectors

involved in Emissions Trading Scheme in the principle of a 20% reduction target. More

advanced energy efficiency plans are required in 2011 and 2014. Ireland published its draft

action plan in 2007. In addition to satisfying the 2016 target of 9% savings, the plan set out

the path to achieving a 20% (33% for the public sector) reduction in energy demand across

the whole economy by 2020, including the electricity, transport and heating sectors. This is

consistent with the 2007 Government Sustainable Energy White Paper ‘Delivering a

Sustainable Energy Future for Ireland’ which sets a further indicative target of 30% to

surpass the general EU ambition of 20% saving.

The following targets are specified in the National Energy Efficiency Action Plan:

Table 4.6: Reference Energy Consumption and Target Savings Values

Target Energy Saving PEE

ESD 9% Target 2016 (ktoe) (GWh)

Reference Energy Consumption 12,531 145,741

ESD Target (9% of Reference Energy Consumption ) 1,128 13,117


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ESD Interim Target 2010 6,500

White Paper 20% Target


White Paper) 20% Target (20% of Reference Energy Consumption) 2,745 31,925

White Paper 30%

Target


White Paper 30% Target (30% of Reference Energy Consumption) 4,118 47,887

These savings are attributed per sector as follows:

Table 4.7: Sectoral Savings

Sector % saving

Residential 53

Business and public 28

Transport 16

Electricity supply 3

These savings must be seen in the context of continuing growth in energy demand, though

energy intensity has improved by 32% between 1990 and 2005 (as measured by energy

usage per unit of GDP). However, this improvement is attributed not only to energy

efficiency but also to structural changes in the economy, with a shift towards higher added-

value, less energy intensive industry and commerce. The EU Green Paper on Energy

Efficiency “Doing More With Less”, asserts that a 20% reduction in energy demand could be

achieved with currently available technologies and, of most relevance to this study, this

improvement can be achieved in a cost effective manner – implying there is a clear

economic stimulus. An analysis conducted by Sustainable Energy Ireland suggests that

potential gains are equivalent to about 24% of current demand in the industrial, commercial

and public, and residential sectors. Using the ODEX indicators specified in the ESD Directive,

SEI, in their (2007) report “Energy Efficiency in Ireland” determined that there was an 8.1%

improvement in energy efficiency between 1995 and 2005. This was composed of a 15%

improvement in technical efficiency, but confounded by a dis-improvement in behavioural

efficiency.

Directive 2005/32/EC on the eco-design of Energy-using Products (EuP) is a Framework

Directive. It is intended to promote the adoption of environmental life-cycle considerations

by manufacturers in the design of products. It defines conditions and criteria for setting,

through subsequent implementing measures, requirements regarding environmentally

relevant product characteristics. It aims to avoid disparities between differing national

regulations and introduces an Integrated Product Policy (IPP) accelerating the move towards

improving the environmental performance of energy-using products. Much of the effort to

http://ec.europa.eu/environment/ipp


84

date has focused on developing a suitable eco-design methodology and testing this with

selected appliances. Current work by SEI is examining lighting systems, boilers and water

heaters, external power supplies and simple set-top boxes.

4.5.4. Trends

SEI has been effective in establishing networks of environmental managers, particularly in

the large energy consuming businesses. The Irish Standard IS393 “Energy Management

Systems” (not to be confused with Building Energy Management Systems technologies)

provides a management structure similar to quality or environmental management systems,

but with a focus on energy. Adoption of this standard by the larger enterprises and the

parallel Energy MAP (Management Action Plan) Initiative for smaller enterprises is both

stimulating investment and building capacity among consultants, which may provide a

springboard for marketing Irish services abroad.

4.5.5. Drivers

Up to 2008 the building boom and rising energy costs were identified by one of the

respondents to the industrial survey as the two key drivers in market growth. With

continuing rising energy costs (with oil at US$200/barrel a prospect) this is now the main

driver for business, underpinned by national energy objectives.

4.5.6. Weaknesses

The Irish Building Regulations do not currently specify any standards or requirements in

regard to the energy efficiency of building operation as distinct from construction. Among

the comments received from industry were: “Irish market very far behind UK in terms of

metering and targeting.”; “Need recognition within Regulations of energy management and

monitoring as an important asset with building design.” A critical requirement for effective

energy management is a clear picture of detailed performance. Absence of metering

indicates there is a market for improved meters, but interpretation of the meter readings is

likely to have greater employment benefit than the supply of the meters themselves, since

meters are likely to be imported from low-cost manufacturing locations (unless of course

local production is encouraged). Building construction standards will go a long way in

achieving energy efficiency, but ensuring on-going performance requires maintenance and

management.

Energy service companies (ESCO), also known as Energy Performance Contracting, is poorly

developed in Ireland, in contrast to some other EU countries. An ESCO is a company that:

“guarantees energy savings and/or the provision of the same level of energy service at a

lower cost through the implementation of an energy efficiency (or renewable energy

project) and is rewarded based directly on the energy savings achieved”. This is distinct

from energy service providers. While both offer similar services, energy service providers

provide a service for a fixed fee or as added value to the supply of equipment or energy.

They may have some incentives to reduce consumption, but compared to an ESCO, they do


85

not assume any risk in case of underperformance, i.e. they are paid a fee for their

advice/service, ESCOs are paid (either in whole or at least in part) based on the results of

their recommendations. While there are several prominent energy service provider (Dalkia,

RWE, Energia, ESB Independent Energy, etc.) few offer ESCO services.

ICT driven ESCOs were identified as a clear area of interest by SEI.

The European ESCO market was estimated in the year 2000 to be in the region of €150m per

annum, while the market potential has been estimated to be between 5 to 10 billion €/year.

The cost effective potential market size for ESCOs in Ireland is estimated to be €49 – €110

million per annum by 2020.125

4.5.7. Case Studies

Cylon Controls

Since 1985 Cylon has provided building control systems worldwide becoming one of the largest

independent manufacturers of building controls in Europe. The company has 50 employees and key

clients include Microsoft UK and Royal Preston Hospital. Cylon provides building energy

management systems across all categories of buildings maximising comfort and efficiency. Cylon's

building energy management solutions have been installed in Europe, North America, Asia, the

Middle East and Africa in large and small commercial offices, retail centres, schools and colleges,

industrial buildings, health and leisure centres, hospitals and hotels.

Because Cylon is focused on building control solutions, they understand the variety of trends and

associated challenges their clients are facing. Cylon builds backward compatibility into the design of

their products, to ensure confidence that the company’s investment in a building energy

management system is secure. Cylon is committed to providing the right product for each building

control solution and the right building control solution to meet specific building energy management

challenges.

Their purpose built energy efficient headquarters in Dublin, Ireland exemplifies the company’s pride

and confidence in its building energy management systems. Encompassing over 18,000 square feet,

the state of the art facility is fully controlled by Cylon's building management system. The building

energy management system is fully integrated with its automated fire and security systems. At this

showcase facility Cylon's energy efficient building control product range is manufactured to the

highest international standard.

Comeragh Controls Ltd.

Comeragh Controls Ltd is an innovative technology-based company whose core business is the

125

Sustainable Energy Ireland, Assessment of the potential for ESCOs in Ireland, Sustainable Energy Ireland, 2005.


86

design and manufacture of technologically advanced intelligent control systems for both the

domestic and commercial markets

With the price of fuels continuing to rise and range of environmentally friendly products available in

the market place, suppliers and installer of domestic and commercial climate system have be faced

with the integration and management of many different systems. Comeragh Controls has responded

to this requirement, by designing a configurable energy management control systems. Comeragh

Controls currently supply systems for private dwellings, hospitals, nursing homes, hotels, schools,

sport facilities, offices, etc.

Comeragh Controls have deign an intelligent controls system, iCon, which enables the installer the

ability to configure the system, thereby enabling the system to be tailored to suite the specific

individual project requirements. Great emphasis has been place on the user interface ensuring the

iCon system is simple to use for both the installer & end user. Through individual zone scheduling &

temperature control, weather compensation, prioritization of multiple heat sources, significant

running cost saving can be achieved..

Glen Dimplex Group Global Energy Centre

The new Glen Dimplex Energy Centre announced in July 2007, will cost €2.5 million and will employ 20 leading researchers and engineers, dedicated to the research and development of energy efficient products for the Group's Irish and global markets. The Energy Centre, will be constructed using renewable and sustainable building materials. In addition, the Energy Centre will house a showroom which will feature innovative products created by the Group's research and development personnel and which will make a significant improvement to energy efficiency in homes and businesses throughout the world. Founded in 1973 by entrepreneur, Martin Naughton, Glen Dimplex, which has an annual turnover approaching €2bn and employs 10,000 people worldwide, is in year 3 of its corporate strategy for creating a new business through the development of energy efficient products using renewable technologies. The global Energy Centre is a central part of this strategic initiative. Glen Dimplex is already the largest producer of heat pumps in Europe and produced 30,000 heat pumps in its state-of-the-art factories in Germany and France in 2006 and expects to grow this volume significantly. In Germany, where Glen Dimplex is the market leader in the production of heat pumps, the company increased its production workforce by 330 people in 2006 to cope with the demand for its Geothermal and Air/water Heat Pumps. In Ireland, over 1,000 Glen Dimplex heat pumps have been installed in Irish homes since 2005. Glen Dimplex is market leader in heat pumps in Germany, Austria, France, Switzerland, Ireland and the UK. With the opening of its new Energy Centre, Glen Dimplex will continue to innovate in the renewable energy product sector with the development of total heating systems solutions with the production of heat pumps, Solar Heating, Wood Pellet Boilers and Heat Recovery Systems.

4.5.8. Barriers

Industry respondents suggest there is still a deficit in the wider business community

regarding the capabilities of energy management. The introduction of the BER scheme has


87

resulted in a major growth in the number of individuals qualified to undertake this work, but

the focus is on rating the asset rather than its on-going activity performance. There are few

companies with scale that could grow into providing goods or services in the export market.


Energy-related consultancy work will present major opportunities. The effective retrofitting

of the existing energy architecture will take place over the next 15-20 years at both large-

scale and domestic levels. The large scale retrofitting will involve a reorientation of the grid

to the location of the renewable sources of electricity as well the deployment of wind

turbines, ocean energy devices and other renewable equipment. The adoption of a

Corporate Social Responsibility or Sustainability outlook by major businesses will provide a

demand for energy consultancy. In parallel, trends to outsource energy management and

energy services will develop energy providers that provide the utility of heating, cooling,

lighting, etc, rather than being solely primary energy suppliers. Building energy rating will

become central to how property is valued in the future. The number of BER assessors will

dramatically increase as will the opportunities for energy consultants who can advise SMEs

and domestic dwellings on the best options around renewable energy solutions and energy

efficiency measures. The stimuli for this will arise from full roll out of the BER system and

consumer response to escalating fuel costs via increased commodity prices and carbon

taxation. Export potential may emerge for energy management services if sufficient scale

can be built on the back of indigenous requirements. However, the current position is that

foreign-owned companies are providing the major ESCO services in Ireland, viewing Ireland

as an extension of their main EU mainland market. Improved goods have also been

addressed in the construction sub-sector report, and include: monitoring and control

instrumentation for energy management systems, higher efficiency lighting systems and

fossil-fuelled appliances e.g. LED lighting, small CHP units, condensing boilers; or appliances

using renewable energy sources, e.g. biomass boilers, solar panels (thermal and

photovoltaic), heat pumps (geothermal, air); building fabric units that combine insulation

and energy collectors, higher efficiency windows, and ventilation heat recovery systems, etc.

Major ICT opportunities exist in this sub-sector. For example, SServer Virtualisation is a

method of running multiple independent virtual operating systems on a single physical

computer. It is a way of maximising physical resources to maximise the investment in

hardware. Server Virtualisation is seen as very important to reduce the heavy energy usage

of ICT databases. (An example of a leading company is VMWare) Another energy saving

opportunity, power management software, is designed to switch machines off or put them

on standby when they are not being used.

4.6. Environmental Consultancy

Services to provide assessment and advice relating to environmental issues include

environmental audits, environmental management systems and training, life cycle

assessment, environmental impact assessment, advice on bio-diversity, environmental


88

regulations and corporate environmental responsibility. Also covers consultants providing

advice in two or more sub-sectors or specialists not covered elsewhere.

4.6.1. Introduction

The services typically provided by consultancy companies in this sub-sector include:

IPPC licensing

Strategic environmental assessment (SEA)

Environmental impact assessment (EIA)

EMS – ISO14001

Carbon foot-printing

Life Cycle Analysis

Environmental policy statements

Environmental monitoring programmes

Wildlife conservation

Ecological studies

SPA/SAC work

Biodiversity studies

Estimating the size of the sub-sector is difficult as many companies offer environmental

consultancy services as an ‘add on’ to their primary competency or activity. Therefore they

are not classified for statistical purposes as an environmental consultancy. For example,

energy management consultancy services may be included in the renewable sector but also

in the general consultancy services NACE sector.

The inter-relationships between environmental consultancies is complex, with large or lead

consultancies frequently engaging the services of a specialist firm (or indeed individuals) to

complete a specific piece of work as part of a larger assignment. For example, a large firm

may have the contract to carry out an EIA for a road project but will retain the services of an

ecologist to produce a report on the impact on bird or bat life.

Companies in this sub-sector fall into one of two categories; either a large, multi-disciplinary

practice (probably multi-national with a headcount of >200), or small companies, generally

no more than 12 employees and a founder who would hold a majority holding in the

practice. The larger practices are generally UK plc companies who have acquired capacity in

the Irish market (North and South) through the acquisition of existing domestic firms. The

decision to establish operations in Ireland was based on the intense level of infrastructural

investment across a number of sectors since the mid-1990s. The purchasing of traditional

style practices was a new concept in Ireland and allowed founding partners to realise the

built up value in the practice and continue working under the new ownership. When pitted

against competing against well-resourced, publicly quoted operations, most Irish practices

chose the former route.


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All of the major environmental consultancies are either all-island or part of internationally

owned companies. Therefore, an all-island market exists de facto.

There are approximately 170 environmental consultancy companies listed in the Enterprise

Ireland envirocentre listing.126 Using an extremely broad definition, the Kompass listings

show 326 environmental consultancies. However, a further filtering of this listing gives a

figure closer to the 170 for Ireland. The vast number of listed businesses on the island are

sole traders, or consultancies with a small number of employees.

For the purposes of this study, consultancy services provided as part of the other sub-sectors

are valued within the figures for that sub-sector. The estimate of the annual market value of

this specific sub-sector as described above in Ireland is around €60-€75 million per annum.

The split between public versus private work in Ireland is estimated to be 30:70. Smaller

consultancies remarked on the fact that tendering for public work was too onerous and

client interactions were too bureaucratic, this tended to turn consultancies away from

tendering for this type of work.

4.6.2. Strengths

Over the past number of years increasing levels of compliance with national and EU

legislation, combined with the growing public capital programme and investment in private

infrastructure, has enabled the sub-sector to respond and ensure that the necessary

expertise is available within Ireland to provide the client support services. The response from

the third-level sector has been attuned to the changing needs and has provided the

necessary courses to meet the demand. This has enabled some consultancies to become

highly specialised in areas such ecology and bird surveys. Companies did not complain of

skills shortages, perhaps because they are using non-Irish experts for the delivery of some

specialised services.

The arrival of the UK plcs into the market has had a positive effect in the provision of

consultancy services on the island. It has freed up the conventional thinking where the

northern office serviced NI contracts and the southern office serviced Irish contracts. There

is a more fluid approach now that allows consultants to develop their skills in two

jurisdictions and develop best practice techniques in the execution of their work.

4.6.3. Weaknesses

Companies in this sub-sector appear to fall into one of two categories; either a large, multi-

disciplinary practice (probably multi-national with a headcount of >200) or small companies,

generally no more than 12 employees and a founder who would hold a majority holding in

the practice. There does not appear to be the strategic intent or indeed the ambition to

develop into larger practices through growth or acquisition. The sub-sector remains 126 http://databases.envirocentre.ie/EnvirocentreConsultancyWeb/consultantsList.aspx

http://databases.envirocentre.ie/EnvirocentreConsultancyWeb/consultantsList.aspx


90

extremely fragmented with little attempted branding or marketing of services. This is

probably some what reflective of the consolidation of a significant number of mid-term

practices under the livery of the larger multi-national practices over the past decade.

The small, domestic companies within the sub-sector appear to be content to compete on a

low overhead model specialising in niche areas. In the context of the knowledge economy

this is disappointing; as its does not position Ireland to compete for work at a European or

international level. While the legislation is uniform at a European level, how it gets

transposed at national level can be different and this can act as a barrier to expansion. Other

respondents referred to issues on applicability of professional indemnity in different states

and local regulations around tax clearance as a hindrance to tendering for work outside

Ireland; this was even mentioned in the context of southern companies applying for work in

Northern Ireland and vice versa.

A common theme emerging was around the enforcement of legislation. It is felt that while a

substantive body of legislation is in place across most of the thematic areas, compliance to

and enforcement of, this legislation continues to be problem and acts as a barrier to the sub-

sector as the necessary consulting expertise is not retained in the completion of applications

due to the perceived lack of penalties involved.

A number of respondents noted that analytical and report-writing skills of new hires was an

ongoing difficulty in developing the sub-sector and something that would require attention

within the environmental graduate colleges.


While a cool-off has been observed in some consultancy areas (EIA, SEA) related to the

construction industry, there are a number of areas where considerable growth is being

experienced including biodiversity (Countdown 2010), water resources and climate change.

These three areas will form a major part of the sub-sector in the coming years.

A recurring theme emerging from conversations with respondents has been the importance

of the water sector in the expected growth of the consultancy sub-sector. The scope of

evaluation work and ongoing monitoring is such that it is expected to generate considerable

work for this sub-sector in the run up to and subsequently after the full implementation of

the Water Framework Directive.

As soon as the market perceives that the there is serious intent in relation to the

implementation of practical measures to reduce GHG emissions, a surge of consultancy

activity can be expected as companies will need to determine their carbon footprint, reduce

their energy usage and offset GHG emissions. This is an entirely new business area with

significant growth potential commensurate to the compliance burden facing both the public

and private sectors as climate change mitigation and adaptation measures begin to bite.


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In the UK the environmental consultancy industry is characterised by a willingness to seek

work overseas. The sector has built up expertise in pollution control in the Middle East

especially in the oil and gas area. More recently, UK consultancies specialising in waste

management and soil reclamation/remediation have targeted Eastern Europe for expansion

as the former Soviet bloc countries struggle with the legacy of their heavy industrial past.127

This appetite for expansion is not limited to the major plcs but also among the smaller

companies; the 2008 ENDS directory noted that 57% of consultancies were seeking work

outside the UK128.

While Irish consultancies would probably lack the sectoral experience mentioned above

there are other possibilities around IPC licensing, ISO14001, SEA and the REACH directive

where the harmonised approach throughout Europe and our excellent domestic record in

these areas would provide the possibility for expansion in the future. Enterprise Ireland

could play an important role in developing a programme to assist consultancies serious

about scaling up their businesses and assistance in obtaining work overseas.

In addition, as a market entry strategy they would need significant intelligence about the

likely flow of public tenders in their niche area of expertise. Once a significant public tender

is secured this provides an exporter with a foothold in the market. This is the business model

used quite successfully by many non-Irish environmental consultancies now present in

Ireland.

4.6.5. Conclusions

The consultancy sub-sector is a new and vibrant sub-sector where its varied expertise can

deliver the requirements of the markets north and south. The growth areas in this sub-

sector are expected to be Biodiversity, climate change, compliance management (REACH,

ISO14001, ISO14064) and water resources. The sub-sector appears to lack ambition to scale

up and explore new markets and, in an era where Ireland looks to position itself as a

knowledge economy, expert services in the international environmental services market

should be viewed as excellent opportunities to meet this goal.

In particular, we would emphasise the consultancy opportunities in the response to climate

change and soaring energy costs. Demand for carbon foot-printing, energy rating and

energy retrofitting services will grow at an extraordinary rate as enterprises respond to

regulatory and market demands. The opportunities exist both domestically and

internationally for these services.

The recent addition of Enviros and RPS to the EI environinireland directory is a welcome

pragmatic response to developing export potential in this sector. These and other multi-

national consultancies have dominated the sector on the island over the past number of

years. They have established significant capability across a number of disciplines which is

127

UK CEED, emerging markets in the environmental sector, November 2006. 128 ENDS Directory 2008 www.ends.co.uk

http://www.ends.co.uk/


92

potentially transferable to other markets. EI should continue to work with these companies

to identify priority areas of expertise and know how, with the agreement of the parent

company, and with EI support target niche markets in Eastern and Central Europe.

4.7. Environmental Monitoring, Instrumentation and Analysis

Products, systems and services for measuring and monitoring environmental parameters.

Examples include water, air and soil quality, meteorological conditions and flow rates,

including on site and laboratory analysis. This sub-sector includes specialist activities not

covered in other sub-sectors, such as air and noise pollution, radiological monitoring, land

remediation and energy management.

4.7.1. Introduction

It is estimated that there are some 28 companies involved in the environmental monitoring

and instrumentation sector in Ireland. All the large environmental consultancies in Northern

Ireland provide environmental monitoring services as do several small specialist companies. 129

There is the potential for overlap between the sector and a number of other sectors,

including energy management and contaminated land. For the purposes of this study, the

sector comprises the following areas:

Environmental laboratory services (soil and groundwater testing, radiological testing,

and marine spill testing);

Ambient air monitoring;

Energy/electricity metering; and

Water metering and monitoring.

The total UK market for the environmental monitoring and instrumentation sector is

estimated to be £189 in 2005, which extrapolates to a Northern Ireland market of £12.8m.130

4.7.2. Regulatory Framework - Ireland

Ireland has developed an environmental monitoring service to cater for the licensed

activities scheduled under the following legislation:

The Water Pollution Act 1977 (and amendments)

The Air Pollution Act 1987

Environmental Protection Agency Act 1992 (and subsequent IPPC Regulations)

Waste Management Act 1996 129 www.KompassDirectory.ie (search phrases, environmental monitoring, environmental instrumentation). 130 Department of Trade and Industry (UK) study Emerging Markets in the Environmental Industries Sector, November 2006.

http://www.kompassdirectory.ie/


93

Protection of the Environment Act 2003

The Building Energy Rating (BER).

Some €753m in public funding has been approved under the NDP, with investment in the

’legacy’ issues of old landfill sites the priority. However, there are no details provided as to

project priorities and the timescale for delivery of the proposed measures.

4.7.3. Regulatory Framework – Northern Ireland

The key legislative drivers for the sector include:

Waste and Contaminated Land Order (NI) 1997: the Northern Ireland equivalent of the

Environmental Protection Act in Great Britain, the Order includes the main legal

provisions for the introduction of a contaminated land regime in Northern Ireland.

The Pollution Prevention and Control Regulations (Northern Ireland) 2003:

Implementing the IPPC Directive, the main focus of the regulations is the application of

Best Available Technology (BAT). However,

The Water Environment (Water Framework Directive) Regulations (Northern Ireland)

2003: These Regulations make provision for the purpose of implementing Directive

2000/60/EC of the European Parliament and of the Council of 23 October 2000

establishing a framework for Community action in the field of water policy. The

Regulations require a new, strategic planning process to be established for the purposes

of managing, protecting and improving the quality of water resources. The Department

must carry out the analytical and preparatory work required by regulations and prepare

proposals for environmental objectives and a programme of measures for the river basin

district and the part of each international river basin district falling within Northern

Ireland (regulation 11). Those objectives will translate the generic environmental

objectives of the Directive into specific objectives which take account of the particular

situation in each district.

Other relevant legislation: the Energy Performance of Buildings Directive has not yet

been implemented in Northern Ireland. However, the introduction of the regulations is

expected in late 2008.

The implementation of the Regulations on the Water Environment and the Energy

Performance of Buildings Regulations will be a key driver for environmental monitoring

systems for water quality and use and energy use.

In the future, a key driver will be the climate change agenda and the adoption of targets for

reductions in GHG emissions from domestic and commercial buildings. The UK Climate

Change Bill has just received parliamentary approval at Westminster. However, it is currently

unclear if the Northern Ireland will be included in its target of a 60% reduction in carbon


94

emissions by 2050.

4.7.4. Trends

A major trend in the housing and commercial building sector will be for the installation of

smart metering and control systems for active energy management as the impacts of GHG

emission targets adopted at national levels cascade down to a sectoral and sub-sectoral

level.

In addition, the specialist market for carbon emission verifiers is growing on foot of Ireland’s

and the UK’s National Allocation Plans.

4.7.5. Drivers

The key drivers for the sector will be water and energy efficiency, with the GHG emissions or

carbon footprint of activities, processes and technologies increasingly becoming the primary

driver. Indeed, even water supply is increasingly being considered in terms of GHG emissions

and climate change.

4.7.6. Weaknesses

Ireland has not addressed opportunities in building operation optimisation which can be

achieved through energy (HVAC and lighting) monitoring and control. This is a requirement

for all public buildings in the UK and is outlined in more detail in the environmental

management and efficiency sub-sector review.

4.7.7. Case Studies

Over the past 12 years University College Dublin has been involved in the development of a

Building Energy Management System (BEMS) which has achieved energy cost savings of

£350,000 per year at current prices and has reduced the College’s overall energy bill from

the equivalent of almost 5% of total expenditure in 1983 to just 1.7% in 1995.131

All pre-1986 buildings on the campus were fitted with stand alone electrical and pneumatic

controls. This meant that over 100,000 square metres of buildings were fitted with time-

clocks, thermostats and temperature controllers of different types and ages. Day-to-day

maintenance of these controls was a considerable headache and the only real information

on performance was through complaints from occupants. Event based control is also used in

combination with time scheduling and delay timers to provide occupancy control of lecture

theatre lighting and ventilation. Outside lighting is controlled using a combination of time-

scheduling and outside light level, and lights are switched on and off at certain times

accordingly. All the main buildings at Belfield have been fitted with electrical check meters

which provide inputs to the BEMS. This allows individual buildings to be monitored on a daily

131

Good Practice Case Study 2. BUILDING ENERGY MANAGEMENT SYSTEMS AT UCD BELFIELD. http://www.sei.ie/uploadedfiles/FundedProgrammes/cs2bemsatucd.pdf

http://www.sei.ie/uploadedfiles/FundedProgrammes/cs2bemsatucd.pdf


95

basis. Flow measuring valves have recently been installed on the heating supply pipe work

from the central boiler house to individual buildings. The BEMS can combine the information

coming from these valves with temperature differentials measured at the flow and return

pipe work to produce an overall heat supply calculation for each building. It is intended to

use this information to have the BEMS produce a weekly total energy consumption report

for each building. The cost savings alone have more than justified UCD’s commitment to

BEMS. However, there are other benefits including improved comfort conditions for staff

and students, centralised control which is vitally important on a large site like Belfield, and

the facility to access the system by modem for remote diagnosis and solving of problems,

reducing callouts for maintenance staff.

The Queens University of Belfast QUESTOR Centre

Centre of Excellence for Environmental Monitoring and Instrumentation

Established in 1989 at Queen's University Belfast, the QUESTOR Centre is Europe's only

Industry/University Co-operative Research Centre (I/UCRC). The I/UCRC concept is a highly successful

model developed by the National Science Foundation in the United States where more than 50 such

Centres have been operating successfully for more than 20 years. QUESTOR has been formally linked

to the NSF Programme since its formation in 1989.

Research & Development Strengths

Remediation technologies (water, soil, air)

Water / wastewater treatment processes (biological, chemical, physical, thermal, plasma)

Environmental genomics

Environmental monitoring and analysis

Waste management and recycling

Environmental modelling (emissions, odour, noise, dust, air quality)

Pollution prevention ('Green chemistry')

Environmental communication

Renewable energy, including bioenergy (particularly energy from waste)

Applied Technology Unit

QUESTOR ATU is a unique, not for profit organisation that exists to serve a wide range of companies.

The unit delivers a professional monitoring service that includes on-site monitoring and

environmental analysis.

http://questor.qub.ac.uk

University of Ulster. Centre for Sustainable Technologies

Centre of Excellence for Environmental Monitoring and Instrumentation

The Centre for Sustainable Technologies at the University of Ulster undertakes multidisciplinary research to create, develop, improve, demonstrate and evaluate emerging, existing and alternative sustainable renewable energy, building design, construction materials and environmental modification technologies.

http://questor.qub.ac.uk/


96

The Centre of Sustainable Technologies has three groups, one of which is Solar Energy and Energy in Buildings which specialises in passive, hybrid and active solar energy systems, energy efficiency of buildings and the eco-sustainability of the built environment.

4.7.8. Barriers

A lack of capacity and weak knowledge base within Ireland are the main barriers that could

be identified.


The opportunity to fund R&D to build capacity and enhance the knowledge base on the

island of Ireland. The following would appear to be areas with future growth potential:

building energy management systems (smart metering); and water quality analysis

4.7.10. Conclusions

The key areas for the development of the environmental monitoring and instrumentation

sector are likely to be the WFD and energy management and efficiency. Increasingly, GHG

emissions, or carbon foot-printing of activities, processes and technologies will be the key

driver.

The key messages are:

Building design standards (domestic and commercial) can be used to develop capacity.

An existing knowledge base exists in Ireland (UCD and University of Ulster) in advanced

energy monitoring systems for buildings.

Knowledge gaps could be addressed through the EPA Science, Technology, Research and

Innovation Programme (STRIVE).

4.8. Marine Pollution Control

Products, systems or services for controlling, clean up and minimising marine pollution.

Examples include products such as oil absorbents and booms; and services such as marine

pollution prevention training, monitoring and clean up services.

4.8.1. Introduction

This sub-sector encompasses products and services that control and clean-up incidents of

marine pollution. Ireland has been fortunate in terms of having very few accidental oil spills

and pollution incidents. There have been several small to medium scale accidental spills

affecting our waters e.g. Sea Empress 1996, a major spill in Milford Haven that affected Irish

coast a month later, Hickson’s fire in Cork Harbour 1996, and the sinking of the Kowloon


97

Bridge 1986.132

The specification of and purchase of goods and services specific to the marine pollution

control sub-sector is restricted to the network of ports on the island of Ireland, private fuel

terminals and the operations of the coastguard authorities on both sides of the border. The

coastguard manages the response to marine pollution incidents as a resulting of offshore

exploration activities.

There are 25 ports operating on the island of Ireland, four in Northern Ireland and 21 in the

Republic and six fuel terminals. 133 The ports network can effectively fall into four categories:

General Cargo Ports (e.g. Belfast Harbour, Dublin Port)

Fishing Ports (e.g. Castletownbere, Killybegs)

Ferry Ports (e.g. Port of Larne, Rosslare Europort)

Fuel terminals (e.g. Whitegate oil refinery, ESB Tarbert)

The total inbound/outbound tonnage amounted to approximately 75m metric tonnes in

2006 (excluding fuel handling), with a total tonnage of 53m in Ireland with a further 22m

tonnes handled through ports in Northern Ireland. 134 The distribution of this tonnage is

concentrated on a few ports:

Dublin Port 27%

Belfast Harbour 23%

Shannon/Foynes 15%

Cork Harbour 13%

Port of Larne 7%

These top five ports account for 85% of maritime freight activity on the island of Ireland. A

review of the environmental plans for these ports provides a reliable indicator of the scope

of the sub-sector. All these ports maintain stocks of pollution control equipment on-site and

the Irish Coastguard also maintains a stock of pollution control equipment at Waterford,

Killybegs and Castletownbere. Other stockists of marine pollution control equipment are

coastal oil storage and processing facilities (Whitegate, Bantry) and power generation

facilities (ESB Tarbert, and ESB Moneypoint).

4.8.2. Drivers

This equipment is used only in the event of a spillage or pollution incident. In contrast to the

UK (2004) where there were 664 incidents involving discharges, there were only 33 around

Irish coasts, and most of these were of a minor nature. 135

132

Marine Institute, NDP submission 2007-2013. 133 IMDO – Irish Maritime Development Office, www.imdo.ie 134

CSO – Central Statistics Office, www.cso.ie/statistics/porttraffic 135 Key Indicators of the Aquatic Environment, EPA (2005).

http://www.imdo.ie/

http://www.cso.ie/statistics/porttraffic


98

There also tends to be a collective approach to incidents where equipment is pooled and

moved between incidents when required. This is most evident with the Shannon Estuary

Anti-Pollution Team (SEAPT), where a consortium of 16 parties manages pollution control in

the estuary. A number of locations around Ireland retain the services of a major UK marine

pollution contractor Oil Spill Response Ltd. who can rapidly deploy specialised teams and

equipment to major pollution incidents. This is done on a retainer basis where equipment

and personnel is effectively rented for short periods in the event of an incident.

Future drivers could include the response to a European Maritime Safety Agency (EMSA)

action plan entitled ‘Oil pollution preparedness and response’. EMSA was established against

the background of perceived inadequate ability to handle large-scale marine pollution

incidents such as the sinking of the Prestige in 2002. EMSA was given the responsibility for

setting up a network of vessels, equipment and other resources to help member states to

deal with pollution from ships.

From these reports, the type of products that fall into this sub-sector would include booms,

skimmers and absorbent materials. These are items used in the case of a pollution incident,

they form part of a contingency plan and are utilised in the event of a spillage or risk of

pollution. Many of the items are capital equipment with life spans of 10 or 12 years. As a

consequence, usage and turnover of equipment and consumables is currently very low. As

an indicative example, the port of Shannon-Foynes holds approximately €600,000 of marine

pollution control equipment at any one time. However, a large port may only expend in the

region of €15-20,000 per annum maintaining and topping up its marine pollution kit.

On the services side, companies or ports provide de-bunkering services to vessels in ports as

well as providing consultancy services to ports in their preparation of response plans.

Overall, the value of the all-island market is estimated to be in the region of €3-5m per

annum.

4.8.3. Strengths

There is little obvious strength on this island in this sub-sector, other than the fact that we

appear prepared in the event of pollution incidents. The port companies have produced oil

spill contingency plans under the Sea Pollution (Amendment) Act, 1999 and maritime county

councils are required to submit their oil spill contingency plans to the coast guard for

approval. There is no impending legislation, nationally or on a European basis that would

drive further investment in this area. A number of ports (Larne, Cork) have adopted the

voluntary environmental code set out in the ECOPORTS criteria; Cork Harbour, in particular,

has an impressive environmental policy statement and reports extensively on environmental

performance centred on controlling pollution risk and minimising potential impacts.


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4.8.4. Weaknesses

As a sub-sector, employment is very limited; pollution response is managed by multi-

disciplinary teams made up from existing port workforces. There is no dedicated supplier of

MPC products or services throughout Ireland. Global suppliers service the market either

from the UK or through a network of agents engaged in the broader hazardous waste area.

On the indigenous manufacturing side, the only significant company whose manufacturing

activities were predominantly in the MPC area was Fast Engineering in Antrim. 136 Due to the

relatively small scale of the offshore oil and gas exploration industry, and the intermittent

nature of this highly risky business, there was no significant opportunity to supply services to

this market segment. The UK is a major competitor in this area of marine pollution control so

it is unrealistic to believe that an Irish start-up company has any prospect of getting a

foothold in this business, other than by acquiring an existing UK based operator. Another

factor mitigating against new business in this area is the declining number of incidents of

marine pollution control in European waters as international treaties on marine pollution

are better respected by maritime companies. In the absence of an indigenous sub-sector,

the prospect of securing new business in export markets is negligible.

4.8.5. Conclusions

The marine pollution control sub-sector is one founded on contingency. It is a question of

having the people and equipment in the right place at the right time. There is no ongoing

use of equipment or dedicated personnel but a plan to mobilise in the event of an

emergency.

There is little or no opportunity for the prospects of inward investment in this sector due to

the fact that there is little global growth in the area and manufacturing tends to co-locate to

active ship building /ship repair locations - Southampton in the UK would be an example.

The Beaufort marine research programme launched in 2007 covered five key areas of

marine research with a view to developing the industry onshore and offshore. A review of

the five thematic areas showed no research into marine pollution control.

Overall, marine pollution control forms a very small part of the environmental goods and

services sector on the Island. Commercial opportunities of all forms across the island are

limited with little prospects for expansion in what is a low growth environment.

4.9. Noise and Vibration Control

Products, systems and services for monitoring and reducing noise and vibration. Examples

include noise meters, monitoring systems, acoustic buffers, enclosures and barriers and

silencers. This sub-sector may also include Environmental Monitoring, Instrumentation and 136

www.fastank.com Fast Engineering specialise in the supply of mobile, collapsible tank for holding pollution spills.

http://www.fastank.com/


100

Analysis activities specific to this sector.

4.9.1. Introduction

Noise pollution (or environmental noise) is displeasing human or machine created sound

that disrupts the activity or happiness of human or animal life.137 Common forms of noise

pollution are from transportation (principally motor vehicles but also including aircraft and

trains) and from industrial plant and equipment vibration.

4.9.2. The Sector

There are 31 companies listed in the Kompass directory and 41 in the Golden Pages

providing noise and vibration related services and products.138 139 Among the most important

indigenous companies are:

Noise and Vibration Consultants Industrial/Construction Acoustic Solutions

Suppliers

AWN Consulting Hydroflow

ANV Technology MTD Solutions

Noise Solutions Acoustic & Thermal Insulations Ltd (A.T.I.L.)

Bord na Mona Environmental Holgate Fencing

AVA Acoustics Tennants

Euro Environmental Architectural Acoustic Solutions (A.A.S.L.)

P&H Vibration Ltd Teschem

Acoustic Designs Buffalo Structures

WS Atkins

The development of Ireland’s transport network infrastructure under the NDP has provided

opportunities for acoustics solutions providers and ancillary monitoring activities. Industrial

applications include enclosures on blowers, fans, pumps and compressors and

monitoring/consultancy required for environmental licensing (including IPPCL) and

occupational exposure purposes.

In Northern Ireland, the following companies specialise in this sub-sector:

- Commercial Connections

- Vontract Acoustics Testing Services

- FR Mark Associates

- Healthy Buildings Intl

- Lest Acoustics LLP

- Pawlings Insulation & Supplies

- RPS Planning and Environment

137 http://en.wikipedia.org/wiki/Noise_pollution 138

www.kompass.ie 139 www.goldenpages.ie

http://en.wikipedia.org/wiki/Noise_pollution

http://www.kompass.ie/

http://www.goldenpages.ie/


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- Peter Lloyd Associates

- Sound and Acoustics Managet

- Sound Control

4.9.3. Regulatory Framework - Europe

The Directive on Environmental Noise aims to provide a common basis for tackling the noise

problem across the EU. 140 The underlying principles of the Directive are as follows:

• Monitoring the environmental problem by requiring competent authorities in Member

States to draw up "strategic noise maps" for major roads, railways, airports and

agglomerations, using harmonised noise indicators. These maps will be used to assess

the number of people annoyed and sleep-disturbed throughout Europe.

• Informing and consulting the public about noise exposure, its effects, and the measures

considered to address noise, in line with the principles of the Aarhus Convention.

• Addressing local noise issues by requiring competent authorities to draw up action plans

to reduce noise where necessary and maintain environmental noise quality where it is

good. The directive does not set any limit value, nor does it prescribe the measures to be

used in the action plans, which remain at the discretion of the competent authorities.

• Developing a long-term EU strategy which includes objectives to reduce the number of

people affected by noise in the longer term, and provides a framework for developing

existing Community policy on noise reduction from source.

4.9.4. Regulatory Framework - Ireland

The Environmental Noise Regulations for Ireland were published in 2006. The Environmental

Protection Agency (EPA) is the body charged with implementing the EU Directive in Ireland.

The regulations state that action plans are to be drawn up for the areas that undergo

strategic noise mapping. These plans will establish actions to be taken to reduce

environmental noise in areas where it is considered to be excessive. They will also serve to

protect areas where the sound quality is considered to be good such as public parks.

The Control of Noise at Work Regulations 2006 (S.I. No. 371 of 2006) include new Exposure

Limit Values in respect of daily exposure levels and peak sound pressure, and introduce a

weekly noise exposure level of not exceeding 87db(A). Noise measurement, risk assessment

and minimisation or protection from excessive noise in the workplace is a statutory

requirement.

The law in Ireland governing the area of noise control is contained in Section 108 of the

Environmental Protection Agency Act 1992 and the Environmental Protection Agency Act

(Noise) Regulations 1994 (SI No. 179 of 1994).141 While the law does not specify an exact

level or standard of noise that is illegal, it is clear that if neighbourhood noise is affecting a

140

Directive 2002/49/EC of 25 June 2002. 141 http://www.enfo.ie/leaflets/fs12-6.htm

http://www.enfo.ie/leaflets/fs12-6.htm


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person’s quality of life, they have a right to expect something to be done about it. Section

108 of the EPA Act provides for the procedure to be followed to secure the limitation or

prevention of noise which is causing a nuisance. Section 107 of the EPA Act also sets out the

powers of a local authority or the EPA to require measures to be taken to prevent or limit

noise. Under Section 106 the Minister has power to make regulations concerned with the

prevention or limitation of noise.

Section 77 of the Roads Act 1993 enables the Minister for the Environment, Heritage and

Local Government, following consultation with the EPA, to introduce regulations requiring

local authorities or the National Roads Authority (NRA) as the case may be, to carry out

works to mitigate adverse effects caused by increased road traffic noise following the

construction of new roads or the improvement of existing roads.

4.9.5. Regulatory Framework – Northern Ireland

The relevant legislation in Northern Ireland is the Environmental Noise Regulations

(Northern Ireland) 2006, which apply to environmental noise to which humans are exposed

in particular in built-up areas, in public parks or other quiet areas in an agglomeration, near

schools, hospitals and other noise-sensitive buildings and areas.

The regulations implement the Directive on Environmental Noise in Northern Ireland and

place an obligation on the Department of the Environment to draw up Strategic Noise Maps

and Actions Plans. Action plans have to be developed during 2008 for the noise sources for

which maps have been produced. The action plans will seek to manage noise issues and

effects from these sources including noise reduction, if necessary, and the protection of

relatively quiet urban areas where they are identified142.

Other standards and guidance of relevance include:

• ISO 9613-2 standard “Acoustics - Attenuation of sound during propagation outdoors”

• BS 5228 “Noise and Vibration Control on Construction and Open Sites”.

• Environmental Protection Agency (EPA) “Guidance note for noise in relation to

scheduled activities”.

• World Health Organisation (WHO) “Guidelines for Community Noise 1999”.

• BS 7385 Part 2: “Evaluation and measurement of vibration in buildings - Guide to

damage levels from ground-borne vibrations”.

• BS 6472 “Guide to evaluation of human exposure to vibration in buildings”.

4.9.6. Trends

Noise regulations and their application through construction programmes (particularly road

network development) is a key market. The licensing of IPPC, waste management activities

(including landfills and waste transfer stations), by the Environmental Protection Agency,

142 http://www.noiseni.co.uk/index.htm

http://www.noiseni.co.uk/index.htm


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requires input from noise and vibration companies during planning and operation.

4.9.7. Drivers

The key driver in both Ireland and Northern Ireland will be the implementation of the

Directive on Environmental Noise and the need for ongoing measurement, assessment and

modelling which this will drive.

The NRA has published Guidelines for the Treatment of Noise and Vibration in National Road

Schemes in 2004. 143 This document provides guidance on the treatment of noise and

vibration during the planning and design of national road schemes. The guidelines are not

mandatory but are recommended to achieve appropriate consistency with respect to the

treatment of noise and vibration during the Constraints, Route Corridor Selection,

Environmental Impact Assessment and construction phases of road scheme planning and

development undertaken in accordance with NRA’s National Roads Project Management

Guidelines (NRPMG). The Guidelines also address noise from operation/use following

construction and cover the noise content of Environmental Impact Assessment (EIA).

4.9.8. Weaknesses

A lack of available technical expertise in noise and vibration in candidates in the jobs market

is considered to be a significant weakness.

4.9.9. Case Studies

ANV Technology

ANV Technology, based in Co. Clare, undertakes impact assessments, monitoring and recommends

controls for environmental noise, vibration and air quality. They also undertake site contamination

and waste management assessments.

Assessments are undertaken in accordance with EPA guidelines. A range of propagation and

dispersion models are used as appropriate.

ANV Technology have undertaken a wide range of projects such as roads, industries, quarries and

mixed developments and also provide expert testimony at oral hearings.

ANV Technology provides expertise in noise control to industrial and larger scale can help provide

the most cost-effective solution by:

Analysis of existing noise problem to identify source and transmission path

Identification and quantification of optimum noise control methods

Specification and design of noise control solutions, for equipment supplier or contractor

Support and supervision during implementation

Commissioning test to verify improvement

143 www.nra.ie/Publications/DownloadableDocumentation/Environment

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4.9.10. Barriers

One company surveyed made the general remark that support mechanisms available to Irish

businesses are not adequate as they are insignificant and also time consuming to access.

However, this opinion was not volunteered by other companies.

Lack of skilled labour has been identified as the most significant obstacle to business growth.


The noise limits and implementation of the action plans set out in the Directive on

Environmental Noise Action Plans are at the discretion of the Government and regulatory

authorities in Ireland (EPA) and Northern Ireland (EHS). However, the Governments could

drive development of the noise sector by taking a pro-active approach to the setting of

standards and ongoing improvements in noise quality provided this does not affect company

competitiveness.

Construction related opportunities exist in the areas of acoustic barriers on motorways and

highways planned under the current NDP. The mining and quarrying sector is also creating

opportunities for companies resulting from planning and environmental licensing

requirements.

4.10. Remediation and Reclamation of Land

Products, systems and services for the identification, assessment and

remediation/reclamation of land and buildings, including prevention of contaminant

dispersal. Examples include adsorbents and injection equipment, monitoring systems and

proprietary treatment processes, and sampling/analysis, the installation of liners or

membranes that are used on contaminated sites after the soil has been removed, and site

investigation/ engineering.

4.10.1. Introduction

The remediation/reclamation of land sub-sector is split between traditional ‘dig and dump’

companies and specialist land investigation and remediation companies, consultancies and

analytical services. Consultancy in this sector tends to be provided by larger companies,

probably due to the higher levels of liability and risk associated with contaminated land

remediation.

Remediation technologies are many and varied. They comprise ex-situ methods involving

excavation of impacted soils and subsequent treatment at the surface; and in-situ methods

that seek to treat the contamination without removing the soils.


105

The export of hazardous waste - including contaminated soil - from Ireland has been a

significant feature of our existing waste management plans; currently 48% of Ireland’s

hazardous waste is exported to seven European countries. In addition, 91% of contaminated

soil is exported for treatment with the remaining 9% processed in Ireland.144 The Proposed

National Hazardous Waste Management Plan 2008 to 2012 sets out to deliver on a number

of objectives, in particular to reduce the generation of hazardous waste - including

contaminated soil - and to strive for self-sufficiency in the management of hazardous waste

and, by extension, to reduce hazardous waste exports. The plan also explores the north-

south potential for all-island solutions. 145

4.10.2. Market Size

The recent increase in the generation of contaminated soil can be attributed to the

development of brownfield sites (especially old gasworks) in dockland areas in Dublin,

Belfast and other urban areas. Industry estimates suggest that 60% of soil is produced from

the construction industry, with the remaining 40% comprising sectors such as transport, and

petrol station decommissioning and domestic home heating spills. In total, 406,904 tonnes

of contaminated soil were removed from sites in Ireland in 2006 up from 168,000 in 2001.

The majority of this soil was exported to mainland Europe, Germany (341,000 tonnes) in

particular, for processing. 146

Enva’s Portlaoise site is authorised to treat up to 60,000 tonnes of contaminated soil each

year; some 9% of total volume. Any additional soil arising is treated on-site of generation or

exported for treatment abroad. Treatment abroad can be as simple as screening to remove

rubble or may involve other physical or biological processes. The post-treated fate of

exported contaminated soil includes construction use, landfill cover, landfill road

construction or simply landfill disposal.

Taking into account these different elements, the soil remediation sub-sector is currently

valued at €30-€40 million annually in Ireland and with an approximate market value of €16 -

€18 million in Northern Ireland. This values the all-island sub-sector at some €46 - €58

million per annum. This is substantially less than the pro-rata figure for the UK where the

sub-sector is valued at approximately €1.33 billion. The reason can be attributed to the

extensive land banks of post-industrial land in the UK and the fact that 70% of new housing

is built on brownfield sites compared with an almost exclusive use of greenfield sites in

Ireland. 147

NI companies active in this sub-sector include RPS, White Young and Green, Enviros,

EnviroCentre, WR&RD Taggarts and Jacobs Babtie. Irish companies include Enva, FLI

144 EPA, National Waste Management Report, 2004. 145 EPA, Proposed National Hazardous Waste Management Plan, November 2007. 146

EPA. Second National Hazardous Waste Management Plan – SEA Scoping Report, RPS Consulting Engineers, November 2007. 147

UK CEED, A study of emerging markets in the environmental sector 2006. www.dti.gov.uk/sectors/environmental/index.html

http://www.dti.gov.uk/sectors/environmental/index.html


106

Environmental, and DCC Environmental.

4.10.3. Drivers

The export of contaminated soil to mainland Europe is not exclusively a factor of inadequate

processing facilities in Ireland. Environmental companies in this sub-sector do provide for

on-site processing and a processing facility exists in Ireland. However, in the absence of

legislation preventing the export of hazardous waste and the higher costs involved in

processing contaminated soil domestically, the vast majority of the soil requiring treatment

is shipped to mainland Europe for treatment. The direct competition from European waste

companies is a critical issue, preventing the development of the sector in Ireland. It is hoped

that changes in German environmental legislation may result in a push towards more

domestic processing of contaminated soil.

While the sub-sector is governed under existing waste management legislation, the adoption

of the proposed Soil Framework Directive will introduce much stricter standards. 148 The SFD,

which will cover some 3.5 million soil contaminated sites (with 500,000 needing

remediation) across the EU, is part of the overall environmental thematic strategy and

follows those for air and water. The Directive includes preventative measures, identification

of the problem and operational measures. The SFD sets out to preserve, protect and restore

EU soils from the problems of desertification, salination, loss of organic material etc. It also

seeks to remediate more brownfield sites through soil cleaning rather than the ‘dig and

dump’ approach.

Another small-scale driver for the sector in the future will be treatment of invasive plant

species. Significant tracts of land are being colonised by invasive species such as Japanese

Knotweed, Giant Hogweed etc. Heavy infestations of these require specialist land

remediation skills.

4.10.4. Barrriers

In the UK there are restrictions in place preventing the movement of contaminated soil

outside the UK ensuring that processing is carried out on-site or at approved locations

throughout the country. In Ireland there is no restriction on the export of contaminated soil.

However, given the recent easing of restrictions in UK policy about the movement of

hazardous waste for disposal between Northern Ireland and Ireland, an all-Ireland market

for contaminated soil is now possible.

4.10.5. Weaknesses

The volume of contaminated soil has probably peaked with the relatively small number of

148

In addition to the SFD (COM (2006) 232), the Commission has also published a Soil Strategy for Europe and an Impact Statement (SEC (2006) 1165), 22 September 2006.


107

brownfield sites in Dublin and Belfast now developed. Some industry sources suggest that

this sub-sector, with the exception of Northern Ireland, is in decline, not entirely attributable

to the construction downturn but to the fact that there are few remaining sites awaiting

remediation. It is expected that a drop off in the volume of contaminated soil being

generated and treated either domestically or in Europe will be observed in the coming year.

In the near to medium term, the remediation of older landfills and the proposed

development of the ‘Atlantic Quarter’ in Cork will provide the most significant opportunities

for this sub-sector. Ireland does not have a history of experience in this area. This has

tended to be the domain of countries with a long history of industrialisation. Technological

developments in this area have tended to come from the UK or other European countries.


The Commission has estimated that the annual costs of soil contamination across Europe

could be as high as €17.3 billion per annum. However, as there are no companies of

significant scale in the Irish market, there is little prospect of new Irish entrants competing

against major established European players for this business.

Provided economies of scale and technical feasibility can be demonstrated, there may be an

opportunity for a suitably placed contaminated soil processing facility on the island.

Currently there is no appropriate legislative framework preventing the trans-national

movement of contaminated soil, as a result any remediation work generating soil in excess

of 4,000 – 5,000 M3 is generally exported. This initiative, coupled with the adoption of best

practices for land remediation as part of an all-Island Sustainable Procurement Action Plan,

could serve as key drivers in this sub-sector.

While Ireland’s lack of industrial history has probably held back development of the sub-

sector, new environmental technologies present an opportunity for Ireland to jump ahead of

the existing approaches and develop a capability in bioremediation. Bioremediation is the

use of micro-organisms and/or plants (phytoremediation) to degrade, immobilise, transport

or transform contaminants in the soils. In the UK the Waste and Resources Action

Programme (WRAP) has promoted the use of waste-derived compost for land remediation.

This could be linked to Ireland’s Market Development Programme for waste resources.

There is little or no prospect of inward investment associated with this sub-sector.

Local enterprise opportunities will be limited to broad-based waste management companies

for whom soil remediation is part of their offering.

An example of how opportunities in a niche environmental area can be developed is best

exemplified in the UK by the CLARRC Centre.


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4.10.7. Case Studies

A CENTRE OF EXCELLENCE FOR LAND ASSESSMENT AND REMEDIATION

The Contaminated Land Assessment and Remediation Research Centre (CLARRC) is a centre of

excellence for multi-disciplinary research. It develops technology for sustainable, cost-effective

assessment and remediation of contaminated environments and promotes its transfer to industry.

CLARRC draws on the resources of groups from the College of Science and Engineering at The

University of Edinburgh, the Schools of Life Sciences and Built Environment at Napier University and

from the Scottish Universities Environmental Research Centre (SUERC). CLARRC offices and core

laboratories are based in the Institute for Infrastructure and Environment, School of Engineering and

Electronics, University of Edinburgh.

The Centre works in partnership with industry, stakeholders and regulators we are active in:

Academic research (e.g. subsurface modelling, biosensors, bioremediation, water pollution,

composting)

Contract research (e.g. treatability studies, remediation trials, product development and

testing)

Laboratory analysis (e.g. environmental, microbiological, ecotoxicological, Waste Acceptance

Criteria)

Consulting & contracting services (e.g. waste management options, geophysical

investigations, remediation of soil and water)

4.10.8. Conclusions

The activity within the sub-sector is heavily dependent upon the cyclical nature of

construction activity on brown-field sites. With the relatively small amounts of this type of

land in Ireland, it does not present much of a base load to develop the industry going

forward. However, in line with the stated policy of reducing the export of hazardous waste

and the impending Soil Framework Directive, this should encourage in-situ or ex-situ

processing of all contaminated soil on the island of Ireland in suitably positioned facilities to

encourage the all—island approach.

The eventual implementation of the SFD will places new demands on the sub-sector as it

seeks to treat soil more as an asset than a waste but the ramifications of any change are

hard to quantify at the point. The key area for development of the sector is likely to be

consultancy services on the treatment and reuse of soils and remediation technology

providers. These development areas could be supported by the adoption of best practice

standards for remediated land and research support for the development of indigenous

capacity and knowledge base in land remediation/reclamation and in the development of

bioremediation technologies.


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4.11. Renewable Energy (RES-E)

Products, systems and services for the generation and collection of energy from renewable

sources such as biomass/bio fuels, solar, photovoltaic, wind, hydro, tidal and geothermal

sources. Examples include the manufacture of equipment, design, construction, installation,

management and operation of renewable energy facilities, including microgeneration.


With climate change now recognised as a significant and threatening global environmental

problem, it is vital that we develop policies and measures that have a sound economic

footing and effectively meet our international obligations to reduce greenhouse gas (GHG)

emissions. Unless these measures are carried out at a regional and local level, the targets

will not be met within the timeframe laid down.

European leaders signed up in March 2007 to a binding EU-wide target to source 20% of

their energy needs from renewables such as biomass, hydro, wind and solar power by 2020.

On 23 January 2008, the Commission put forward differentiated targets for each Member

State, based on the per capita GDP of each country.149 Ireland and Northern Ireland’s’s

climate change policy operates within the context of an overall EU climate change strategy.

The objective of reducing GHG emissions is closely linked to the achievement of sustainable

development in Ireland/Northern Ireland. The main renewable energy resources available

on the island are: 150

tSun (solar thermal and solar PV)

Wind

Water (hydropower, wave and tidal energy)

Geothermal energy

Biomass (wood, waste, energy crops).

4.11.2. Market Developments - Europe

According to the International Energy Agency (2007), renewable accounted for 13.1% of the

world’s total primary energy supply in 204, with biomass (79.4%) and hydro (16.7%) the

principal sources. The ‘new’ renewable – solar, wind and tide – make up less than 0.1% of

total primary energy supply. In its Alternative Policy Scenario, the IEA (2007) predicts that

by 2030 renewables will remain at around 14% of global energy consumption, but its share

of the electricity mix will increase from 18% to 25%. A $1 trillion investment programme is

needed to meet these targets. China is expected to leapfrog all industrialised countries as

the main producer of RES-E as it has a national target for renewable of 30% by 2050. The EU

is the world leader in renewable energy with a €30 billion turnover and employing

149 http://www.euractiv.com/en/energy/eu-renewable-energy-policy/article-117536 150 http://www.sei.ie/index.asp?locID=5&docID=-1

http://www.sei.ie/index.asp?locID=5&docID=-1


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350,000.151 The market leaders are Brazil (biofuels); China (solar hot water); Germany (solar

electricity); and Spain (wind power). Morgan Stanley (2008) estimate that global RES-E sales

could reach €353 billion by 2020 and as high as €700 billion a year by 2030. In 2005,

Germany was the world leader in wind power (with 18,430 MW of installed capacity), solar

photovoltaics (1,400MWp of installed capacity), production of bio-diesel (1.9 million litres),

and, with China, overall investment in renewables.

The EU’s Strategic Energy Technology Plan (SET-PLAN) was set up to accelerate development

and deployment of cost-effective low carbon technologies and complementary policies and

measures to help the EU achieve its proposed 20% reduction in GHG emissions by 2020;

‘technology push’. 152 As part of this initiative, the Commission published a report on the

current status and prospects of key energy technologies. 153 In addition, a study has been

completed of the R&D energy capacity at EU level which found that the volume of public

investment has fallen, notwithstanding a broad recognition that R&D investment in the

energy sector is crucial against the background of the EU’s climate change/renewable

package. Germany, France and Italy account for nearly 75% of public R&D energy funding. A

similar pattern is evident in relation to business R&D, with Germany, France, Sweden and

Italy accounting for nearly 75% of the total spend. The study also found that cross-EU

cooperation is very weak and assessed the way that energy R&D activity is organised at

member state level with reference to US and Japanese benchmarks. In 2005, Ireland did not

record any public funding for in the R&D category for the production, distribution and

rational use of energy. Not one Irish company was listed among the 73 largest EU companies

investing in the energy R&D sector. A key finding (figure20) was the relative importance

attached to different themes in relation to overall energy-related funding. 154

The European Commission will publish later in 2008 a Communication on financing low

carbon technologies that will examine the opportunity of creating a new European

mechanism/fund for the industrial-scale demonstration and end market replication of low

carbon technologies.

In Europe, in the energy sector, five types of support models exist: feed-in tariffs, quota

obligations, fiscal incentives, tenders and green certificates. Feed-in Tariffs are a price-based

policy which set the price to be paid for renewable energy per kWh generated (in the form

of guarantee premium prices). This is often combined with a purchase obligation. Solar

projects in Germany receive as much as €0.57 per kWh. 155 The PREMIA project undertook a

detailed analysis of support measures for biofuels. 156

151 3E Intelligence, 2008. 152

http://ec.europa.eu/energy/res/setplan/communication_2007_en. 153 Commission Staff Working Document: Technology Map, SEC (2007) 22 November 2007. 154 Commission Staff Working Document: A European Strategic Energy Technology Plan, SEC (2007) 1511, 22 November 2007. 155 Ringel, M. (2006). Fostering the use of renewable energies in the EU; the race between feed-in tariffs and green certificates. Renewable Energy 31, 1-17. 156 www.premia-eu.org

http://ec.europa.eu/energy/res/setplan/communication_2007_en

http://www.premia-eu.org/


111

The following factors have lead to the relative success of the German RES-E sector: 157

Feed-in tariffs

Use of standards to set high technical performance levels

Creation of social acceptance of renewable

The use of industrial policy to promote indigenous enterprise

Use of public procurement to drive demand for innovative goods

The Commission-funded Measuring Eco-innovation (MEI) Research Project defines and

develops indicators on eco-innovation to provide a rationale for future policy research. 158

Specifically, the MEI offers a conceptual clarification of eco-innovation based on an

understanding of innovation dynamics.

4.11.3. Market Developments – Ireland/Northern Ireland

There is on-going North-South co-operation in the sector under the auspices of a Joint

Steering Group (JSG) established in July 2003. The JSG comprises of senior officials from the

Department of Communications, Marine and Natural Resources and Northern Ireland

Department of Enterprise, Trade and Investment and the offices of the two Regulatory

Authorities (Commission for Energy Regulation (CER) in the South and Northern Ireland

Authority for Utility Regulation (NIAER) in the North).

In 2005, the Minister for Enterprise, Trade and Investment, Northern Ireland and the

Minister for Communications, Marine and Natural Resources, started a period of

consultation on how the future energy needs for the island can be achieved in a sustainable

manner. The two Ministers agreed that this process should be initiated with the publication

of a joint high level consultation paper that seeks to map out a possible ‘2020 Vision’ for

policy cooperation on the development of sustainable energy supplies for the island of

Ireland. Their agreement is set within the framework of the All Island Energy Market

Development Framework and the need to bring long term and mutual economic and social

benefits to consumers, North and South. The Sustainable Energy Working Group (SEWG) of

the Joint Steering Group (JSG) for the All Island Energy Market is mandated to develop

policy in relation to electricity supply to 2020 and beyond and will also be dealing with heat

supply, energy efficiency and combined heat and power (CHP). 159

In January 2008, a report on an All-Island Grid was published.160 The study examines:

a range of generation portfolios for Ireland,

157 Op cit Insead report. 158 www.merit.unu.edu/MEI/ 159

http://www.dcmnr.gov.ie/NR/rdonlyres/6F292506-1DAF-4A57-9586- 3A42CEE6C63A/0/RenewableElectricity2020final.pdf. 160

http://www.dcmnr.gov.ie/Energy/North-South+Co-operation+in+the+Energy+Sector/All+Island+Grid+Study.htm

http://www.merit.unu.edu/MEI/

http://www.dcmnr.gov.ie/NR/rdonlyres/6F292506-1DAF-4A57-9586-3A42CEE6C63A/0/RenewableElectricity2020final.pdf

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112

the ability of our power system to handle various amounts of electricity from renewable

sources,

the investment levels required, and

the climate change and security of supply benefits that would accrue.

Grid capacity, access conditions and the availability of refit tariffs influence investors’

decisions. Clearly the correct policies are in place as the CER had applications for 7,000 MW

of additional capacity prior to the recent Gate 3 announcement. 161

In March 2007, EU leaders endorsed proposals from the Commission to cut CO2 emissions by

at least 20% by 2020 (30% if global targets can be agreed on) and to set a binding 20% target

for the use of renewable energy sources. 162 On foot of this political commitment, the

Commission presented comprehensive proposals to deliver the EU’s climate change and

renewable targets. 163 Decision taken at government level on foot of the implementation of

this package will drive investment decisions in the areas of RES-E and energy efficiency.

Ireland’s individual target for 2020 is 16% of energy from renewables. Hydro and wind

power make up most of Ireland’s RES-E production. The RES-E share increased from 6.8% in

2005 to 8.6% in 2006. Important changes have occurred at a policy level. Ireland has

selected the Renewable Energy Feed In Tariff (REFIT) as its main instrument. From 2006, this

new scheme is expected to provide some investor certainty, due to a 15-year feed-in tariff

guarantee. No real voluntary market for renewable electricity exists. There is also an

absence of a genuine market for biofuels. However, support schemes have been in place

since 2005 so this is expected to change.164

It was against the background of the EU’s climate change/renewable package that in March

2008 the ESB announced a €22 billion investment programme, Strategic Framework to 2020,

and also set a target to make its energy generation business carbon “net-zero” by 2035. 165

It aims to achieve this through direct investment of €4 billion in renewable energy projects,

€6.5 billion spent facilitating renewables including smart metering and smart networks and

€11 billion to be invested by ESB in its networks. It will also facilitate the development of up

to 6,000 MW of wind on the island.

In 2006, the total value of investments in sustainable energy worldwide was $100 billion.166

The overall turnover of the European renewable energy industries (including wind energy) is

€10 billion,167 according to EREC (the European Renewable Energy Council), but it is not

broken down by sector.

161 Statement from CER on a proposed Direction and Comments/Response Paper on the treatment of renewable projects in Gate 3 of the group processing approach to network connection, 11 July 2008. 162 http://ec.europa.eu/commission_barroso/president/focus/energy-package-2008/index_en.htm 163

The Commission’s proposals of 23 January 2008 are assessed in a comprehensive manner in a report on Climate Change (forthcoming) published by the Institute of European Affairs. 164 http://ec.europa.eu/energy/climate_actions/doc/factsheets/2008_res_sheet_ireland_en.pdf. 165

http://www.esb.ie/main/news_events/press_release337.jsp 166 http://www.taoiseach.gov.ie/index.asp?locID=582&docID=3800 167

Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU Final report, Ernst & Young, August 2006.

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Several schemes now operate in Ireland, including a grant scheme (managed by SEI) for the

installation of biomass fuelled and anaerobic digestion CHP units; a feed-in tariff (€120 per

MWh) for the production of electricity from biomass CHP and anaerobic digestion.

4.11.4. The Market in Ireland

The Golden Pages lists companies under a number of sub-categories: Renewable- Energy

Resources (122), Solar Energy - Heating (56), Solar Energy (53) and Heat Pumps (9). 168

Key players in the sector in Ireland include:

Electricity Generation/Distribution Wind Energy Equipment

Suppliers Manufacturers

Microgeneration

ESB Vestas Coolpower Products Ltd.

Airtricity GE F4 energy

Energia Enercon CES

Viridian Siemens

Eirgrid Gamesa Heat Boilers

Bord Gais NEG Futura Energy Solutions

Ocean Energy Nortank Stoker

Wavebob Windward Energy Kedco

Ocean Energy Surface Power Gerkros Heating Technology

Hydam Heatlink Jedcoe Manufacturing

Heat Pumps Solar Biofuels

igen Genertec Capway Bioenergy

Allard Renewables Solarite Ireland Teagasc

Eco-nrg Bioverda

Consultants Elementary Energy

Enviritech Engineering Total Energy Management

Hyperion

The (2008) Energy Year Book also lists companies who are involved in the energy sector

overall on the island. 169 Insofar as the RES-E sector is concerned, 139 companies are listed.

Renewable energy consultants: 15

Renewable energy building consultants 11

Wind project engineering consultants 13

Power generation and CHP 25

Wind turbine manufacturers/project turnkey 5

Small scale wind equipment suppliers 8

Biomass 16

168 www.goldenpages.ie 169

Energy Ireland Yearbook 2008. It would be very useful if a similar Yearbook was prepared for the EGS sector.

http://www.goldenpages.ie/


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Hydro 1

Solar 24

Heat pump suppliers 21

4.11.5. Wind Energy - Europe

Modern wind power technology is largely based on know-how gathered from EU RD&D and

deployment activities related to onshore and offshore wind energy.

By the end of 2006, the capacity of wind energy systems installed globally was almost

75,000MW, with the EU accounting for about 67% of this capacity. After Germany, Spain has

the second highest amount of installed wind power capacity (10,030 MW). The US and India

are now investing heavily in wind power. Germany, Spain and Denmark account for some

75% of EU R&D activity in the wind power sector. Capital costs for wind generation plants

are of the order of €1,200 per kW for onshore technology, and up to €2,200 per kW for

offshore; exclusive of connection costs. Currently, the average turbine size in the EU is

around 1.3 MW onshore and 2.1 MW offshore. It is expected that turbines as large as 10MW

will be installed by 2030. Seven of the top ten wind turbine manufacturers are located in

Europe. These include Vestas and Siemens (Denmark), Gamesa (Spain) and Enercon and

Nordex (Germany). GE Wind is the largest manufacturer in the US. There has been a recent

surge in investment in wind technology in both China (Goldwind) and India (Suzlon).170

The European Commission has forecast that installed wind capacity- including a 50%

contribution from offshore – will grow from 50 GW (2007) to 120 GW in 2020 and 148 GW

by 2030, representing some 11% to 18% of projected EU gross electricity consumption

respectively. After 2030, the contribution of wind energy to EU electrical consumption is

expected to stabilise, with market structure shifting from additional to replacement

capacity.

The main barriers to large-scale wind deployment at EU level are:

Grid integration as current electricity transmission and distribution systems have been

designed and developed to manage more traditional generation technologies;

New materials, control strategies and concepts need to be developed in order to cope

with and/or reduce mechanical loads on wind turbine components and to increase

stability;

Lack of EU research facilities for testing wind technology;

Energy storage mechanism to compensate for the fluctuating, unpredictable nature of

wind generation;

Disparate levels of financial support;

Social acceptance of wind energy; and 170 BTM Consult (2007).


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Shortage of qualified work force.

4.11.6. Wind Energy - Ireland

The role of wind energy will be absolutely central in Ireland’s progress towards reaching its

GHG reductions 2020 targets and overall in the step change to ‘decarbonise’ the economy.

Within the overall EU package there is a specific target to obtain 16% of final energy demand

from renewable sources. Throughout Europe, and particularly in Ireland, wind energy will

provide the bulk of this capacity.

In Ireland, 800 MW of installed capacity was connected to the national grid between 1992

and 2007. This was delivered via onshore and offshore wind farms with a total of 708

turbines. Wind energy represents 13% of Ireland’s total generating capacity and delivered

6.8% of total electricity generated in 2007. The potential of wind energy as a generating

asset was best exemplified in January 2008, where 26% of the electricity needs on a certain

day were met by the network of wind farms. Airtricity was an early mover in the renewable

energy generation business with construction of off-shore and land-based generation

infrastructure.

A review of the existing and planned installation of wind energy capacity demonstrates this

scaling up process currently underway:

Connected 803.4 MW

Contracted 474.5 MW

Gate 2 1,267.8 MW

‘In the queue’ 4,257.2 MW

Total 6,802.9 MW

This generating capacity, if fully commissioned, would represent 112% of the total

generating capacity available from all sources today and approximately 70% of projected

capacity in 2020. This would probably represent 5,000–6,000 individual turbines offshore

and onshore.

Importantly, after the hiatus in the early part of the decade, the commercial landscape for

this industry appears a lot more certain for suppliers, operators and owners alike.

4.11.7. Biomass

Ireland’s Bioenergy Action Plan (2007) outlines the framework for Ireland to develop its

bioenergy resources to generate electricity, for use as transport fuels, for use in heating and

cooling buildings and for conversion to biochemicals as industrial raw materials. 171

The National Council for Forest Research and Development (COFORD) convened and

171http://www.dcmnr.gov.ie/Energy/Sustainable+and+Renewable+Energy+Division/Report+for+website.htm

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116

facilitated a strategic group formed from the saw milling and forestry sectors which

appointed Electrowatt-Ekono, an international consultancy specialising in biomass and

energy, to carry out a strategic study in the area of wood use for energy in Ireland.172 The

report “Maximising the Potential of Wood Use for Energy Generation in Ireland” includes an

outline of the potential sectors where wood fuel could be used to substitute existing fuels in

solid fuel power plants and heat only plants in the domestic, commercial, public and

industrial sectors. Ireland’s annual Total Primary Energy Requirement (TPER) was estimated

at 603 PJ in 2003, and this was forecast to rise to 737 PJ by 2015.173 In contrast, the total

annual energy potential of all pulpwood, sawmill residues and harvestable forest residues

produced in Ireland in 2003 was estimated to be 17.3 PJ (2.3 million green tonnes), which

would rise to 26 PJ (3.5 million green tonnes) by 2015, given favourable market incentives.

Wood Energy Ltd recently commissioned its 1,200kW Binder wood boiler at the Charlestown

Shopping Centre in Finglas, Dublin. It is the largest wood-fuelled district-heating system in the UK

and Ireland. The energy centre provides space and water heating for 284 residential apartments and

a variety of retail outlets.

The following crops have been identified by Teagasc as suitable for agricultural growth as

biomass in the Irish climate are: 174

Willow

Miscanthus

Hemp

Reed Canary Grass

One hectare of willow is equivalent to 3.6 tonne or 4,000 L of oil while for miscanthus 1

hectare is equivalent to 4.07 tonne or 4,660 L of oil.12 The 2007 budget provided grants for

establishing willow and miscanthus.

Phase 2 biofuels (using enzymes to breakdown the cellulosic content of feedstock) is an area

where existing research should be further supported. Gasification of wood pellets can result

in an increase of up to 30% in calorific output and should be promoted as a more efficient

heat energy technology (over conventional biomass boilers).

4.11.8. Biofuels - Europe

Biodiesel can be made from waste vegetable oil (via trans-esterification) of from plant oil

(e.g. rape seed oil). Bioethanol is produced from fermentation of sugars found in crops (e.g.

172

http://www.woodenergy.ie/iopen24/defaultarticle.php?cArticlePath=4 173 “Maximising the Potential of Wood Use for Energy Generation in Ireland”, COFORD, 2003. 174

http://www.teagasc.ie/publications/2007/20070306/index.htm

http://www.woodenergy.ie/iopen24/defaultarticle.php?cArticlePath=4

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sugarcane) or from waste streams (e.g. whey from cheese production). Bio-ethanol and bio-

diesel are the most common biofuels used in transport worldwide. Agriculture biomass in

the EU is the dominating feedstock with rapeseed being the main raw material for bio-diesel

production while cereals and sugar beets are the main sources for bio-ethanol. Forestry

biomass is mainly dedicated to power and heat markets. Bio-ethanol production is currently

based on a fermentation process of starch and/or sugar. It is considered that bi-ethanol and

bio-diesel can be blended up to 10% and 25% respectively without significant changes on

vehicle engines or operating infrastructure.

The use of second generation lingo-cellulosic materials as feedstock for bio-fuels production

is the priority of the EU’s Biofuels Technology Platform. Market entry for advanced biofuels

production processes is foreseen around 2015-2020. The European Commission has forecast

that biofuels will have a 14% market share of transport fuels in 2020 rising to 20% in 2030.

Biofuels reached a share of about 1% of all transport fuels sold in 2005. Only Sweden and

Germany met the 2005 target set by the Biofuels Directive and these two countries have

advanced second generation demonstration plants. The US is the largest investor in biofuels

R&D, with Sweden and Germany the highest spenders within the EU.

Almost 4% of the EU gross energy demand is covered by biomass resources; some two thirds

of all RES-E used comes from biomass. Biomass-converting systems are high R&D priorities in

several member states, especially Finland, Austria and the Netherlands. The Nordic countries

have a long tradition in exploiting these resources. Sweden and Finland generate electricity

from biomass. Consequently, the scientific and technological capabilities for biomass are

advanced in Europe.

While there is an expressed requirement that 10% of transport fuel must come from

biofuels, this is being reinterpreted as a 10% requirements from renewables, softening the

drive to biofuels. This distancing is in part driven by concerns that Europe will not be able to

supply the biofuels;175 that present production is unsustainable;176and, allegations that food

prices have been severely increased by fuel crops.177

There is one biomass CHP plant in Ireland at present, producing 3MW of electricity. Ireland

has one of the best climates for biomass in the EU, with miscanthus and willow on short

rotation the best prospects. It is expected that recent incentives to promote anaerobic

digestion CHP will be fuelled by biogas from animal manures and from food industry

residues.

At EU level the main barriers to the deployment of biofuels are:

175 Reuters, “EU report see biofuel giving 3.4% of 2020 needs” – commentary on leaked draft EEA report, 4 July 2008. 176 Environment Committee, European parliament, List of key compromise amendments tcm29-174034 on Directive Proposal COM2008-0019, 7 July 2008. 177 The Guardian, “Secret report: biofuel caused food crisis”, 4 July 2008.


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Cost competitiveness of biofuels with regard to conventional fuels;

Under-funding of R&D investment in feedstock and biomass supply logistics;

Too few demonstration projects at industrial scale;

Sustainability of biomass production.

DALKIA (www.dalkia.com)

Dalkia operates over 100 biomass plants throughout the world; over 1.275 billion MWh of managed

primary green energy. The company secures biomass supplies (forests, used wood, secondary

products from the timber industry, dedicated crops) and creates a supply chain if there is not one in

existence. In addition to carrying out the design and construction of the production plant, Dalkia will

find a contractor to project manage all operations. Dalkia believes that converting wood into energy is

a cost-effective and environmentally responsible solution for heating networks, healthcare facilities,

universities, industrial sites and residential complexes.

0₂DIESEL (www.o2diesel.com)

O2 diesel is a verified, proven and understood oxygenated diesel technology – an ethanol-blended

flexible fuel that provides premium diesel performance with all diesel products. The product is

currently available only in the US and Brazil and will be demonstrated soon in European and other

world markets. O2 Diels ahs entered into a five-year agreement with Abengoa Bioenergy, the largest

bioethanol producer in Europe.

4.11.9. Biofuels - Ireland

The Department of Communications, Marine and Natural Resources has been operating the

biofuels MOT Relief Scheme II since 2006. There were 11 applications received in the

Bioethanol category, 36 in the EN590 category, 18 in the Pure Plant Oil category and 37 in

the Captive Fleets Category. A panel comprising officials from DCMNR, Sustainable Energy

Ireland and Enterprise Ireland assessed the applications and made recommendations to the

Minister for Communications, Marine and Natural Resources. On 23 November 2006

Minister Dempsey announced that sixteen biofuels projects were to be granted excise relief

under the Scheme.178

When at full capacity in 2008, the Scheme will result in 2% market penetration of biofuels in

the transport fuel market. It will result in emissions savings of over 1.2m tonnes of CO2 over

the five years of the programme.

Bioethanol from Whey Waste

178 http://www.dcmnr.gov.ie/Energy/Sustainable+and+Renewable+Energy+Division/Biofuels+Scheme+II/

http://www.dalkia.com/

http://www.o2diesel.com/

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Maxol introduced E5 in its 150 stations in Ireland, with ethanol made from whey. 179For the first time

throughout Ireland, drivers of standard petrol powered vehicles will be able to use a biofuel without

risk to the car manufacturer's warranty. The fuel was introduced at all 150 Maxol service stations

nationwide in September 2007.

The Maxol Group replaced its regular unleaded petrol with its new E5 fuel - a blend of 95% petrol

and 5% locally produced bio-ethanol which will retail at the same price as standard unleaded petrol.

Maxol's E5 fuel has been successfully piloted at over 24 service stations throughout the North East

of Ireland since September 2006.

The bio-ethanol fuel in E5 is 100% organic and is currently made from whey, a milk derivative and a

by-product of the Carbery Milk Products Cheese plant in Ballineen, Co. Cork.

The rollout of the E5 green fuel is another first for Maxol in the Irish fuels market, following on from

the launch of their E85 fuel (85% bio-ethanol) in September 2005. It is part of Maxol's commitment

to renewable fuels and to helping the Irish Government meet bio fuel consumption targets set out in

EU Directives. These targets require bio fuels to account for 5.75% by 2010 and 20% by 2020.

There remain serious reservations about the environmental sustainability of the first

generation of biofuels.

4.11.10. Anaerobic Digestion (AD)

Biogas from anaerobic digestion can be used in electricity generation. Sources available for

digestion are agricultural slurries, sewage sludge, food and catering wastes, the

biodegradable fraction of municipal solid waste (MSW), industrial sludges and landfill gas. 180

Some 132 million wet tonnes of agricultural slurries, wastewaters, effluent and sludge are

generated in Ireland annually, while the primary food processing and catering sectors also

generate substantial waste flows. 181 At present the majority of these wastes are either

spread on land, rendered, or disposed to landfill, but with additional processing these waste

flows can be more beneficially exploited.

Anaerobic digestion technology is in competition with composting for feedstocks. It has had

a chequered operational history in Ireland in terms of reliability and there may be a

prejudice against the technology here as a consequence. However under controlled

conditions it is now a proven technology and has its place in the Irish market. On-farm AD

plants are considered viable in the Irish context but centralised plant feasibility is dependent

on gate-fee prices for sludges, slurries and other feedstocks (and to a lesser extent on the

electricity price payable). 15 The EPA consultation document on AD concluded by saying that

“AD has the potential to deliver multiple environmental benefits, including reduced water

pollution potential, lower greenhouse gas emissions, and reduced odours from agricultural

slurries. In places that have high concentrations of animal waste threatening water quality,

179 http://biopact.com/2007/08/maxol-to-introduce-e5-in-its-150.html 180

Renewable Energy Development 2006, An overview of policy and strategy evolution, DCMNR. 181 http://www.epa.ie/downloads/consultation/epa_discussion_paper_anaerobic_digestion.pdf.

http://biopact.com/2007/08/maxol-to-introduce-e5-in-its-150.html

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120

centralised AD can play a significant role in managing the problem. AD is also unique among

policy instruments as it can deliver positive outcomes for multiple policy objectives with

respect to global warming, renewable energy and water pollution.

The major stumbling block for AD is that its financial return is insufficient to repay the

investment outlay, but usual financial analyses ignore the environmental benefits.

Government support for centralised AD can be justified on the basis of its environmental

benefits, which without government support would not be realised.

4.11.11. Solar Energy

There are three basic approaches in use to gain the maximum benefit of solar energy in

buildings: 182

Passive Solar

Active Solar Heating

Solar Photovoltaic (PV) Systems

Solar for heating (space and water) is a simple technology and is proving popular in the SEI

grant schemes for domestic and commercial installation. Photovoltaic systems are generally

small scale and should continue to be promoted for domestic, local authority (incl. street

lighting, signage) and commercial/industrial applications. Currently there is no argument for

or against large scale electricity generation from solar.

4.11.12. Solar Energy - Europe

Photovoltaics: Very high growth - some 30% over the past five years – has been recorded.

Higher levels of production have led to significant price reductions, with an expectation that

the cost of electricity from PV systems will be comparable to the retail price of electricity in

2015.

Si-crystalline-based cells are a mature technology for a wide range of applications, whereas

technologies as thin-film silicon cells, dye-sensitive cells, and polymer solar cells are not yet

as competitively priced. High concentration devices that are better suited for large grid-

connected multi-MW systems, and compact concentrating PV systems for integration in

buildings.

Installed capacity of PV systems in the EU 92006) was 3.4 GWp; some 0.5% of the total EU

electrical capacity. The European Commission is predicting that by 2020 some 12 GWp will

be installed, rising to 22 GWp in 2030. Germany (with the support of attractive long term

financial support in the form of feed-in tariffs), the Netherlands and Switzerland have

invested most in this technology. Germany has 1150 MWp installed; the EU total is 1250

MWp. Conergy of Germany is the second largest solar energy producer in the world. 182




121

In the EU, production is carried out by many SME enterprises, whereas in Japan, the world

leader at present, production is concentrated in a few large corporations. It is forecast that

new and emerging technologies will come to the market, including high concentration

devices that are better suited for large-scale grid-connected multi-MW systems and compact

concentrating PV systems for integration into buildings.

The main barriers to the rapid deployment of PV technologies at EU level are:

High production cost of electricity;

Lack of skilled professional;

Usage of precious raw materials e.g. silver;

Long waiting times to secure grid connections;

Under-funded research;

Requirement to have a generous feed-in tariff in the long-term

Poor awareness of potential within building and construction sector

Solar: The concentrated solar thermal power sector (CSP) is now reviving due to a

favourable supporting framework in Spain and increasingly in the US. A CSP plant consists of

a solar concentration system made of a receiver and collector to produce heat and a power

block. The most mature large scale technology is the parabolic trough/heat transfer medium

system. Led by Spain, Europe has a market leadership in CSP technologies worldwide.

Solar-thermal systems installed in Europe are predominantly based on glazed flat plate and

evacuated tube collectors, with the vast majority of capacity (90%) comprises single family

house units used for the supply of domestic hot water. In addition, there are a few large

scale systems installed in Denmark, Sweden, Germany and Austria which deliver heat to

district heating networks. Total installed capacity was 13GWth, which produced

approximately 0.7Mtoe of useful heat. The potential of solar heating and cooling technology

is large however, with upwards of 135 GW in installed capacity forecast by 2030.

Solar Valley near Leipzig was built by German company UV and contains the largest series of

solar modules in the world. It is reckoned that Germany is twenty years ahead of its global

competitors. The critical success factor was the availability of feed-in tariffs.

Solar Panels at Bewley’s Hotel, Dublin Airport183

The installation of a solar water heating system in the Bewley’s Dublin Airport Hotel took place

during construction of the building in 2005/2006. The system comprises 308 m2 of solar collectors

and two 5,000 litre storage cylinders. The estimated cost of the solar system was €210,000,

approximately 25% of this was obtained from SEI for the purchase and installation of the solar

panels.

183

http://www.irish-energy.ie/index.asp?locID=1034&docID=-1

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Based on hot water consumption in other hotels in the group, an estimate was made for the daily

demand for hot water (15o – 65oC) in the hotel. Based on the Irish climate and the maximum

contribution from solar energy, it was estimated that operating at optimal conditions, the solar

system could provide approximately 40% of the hotels hot water requirements.

The solar panel system at Bewley’s contains innovative design features including the drain-back

system. There are a number of advantages to this system including:

• no additives are needed

• inherent safety in the event of overheating or power failures

• minimum maintenance levels are required

• the performance compares well with other installations

• system durability is increased

• the lifetime of the solar system is extended to more than 30 years

Estimated Payback Analysis

Total Project Cost €210,000

SEI Grant €52,500

Annual Fuel Cost Savings €15,000

Payback Period 10 years

4.11.13. Ocean Energy - Europe

There are several forms of ocean energy, for instance, marine current, wave and tidal

energy. One of the largest units is the 240 MW tidal plant of La Rance in France. A large

number of devices and designs are currently being studied and/or developed; up to 50 types

of wave energy converters identified in a recent study. Large scale wave power

demonstration facilities are currently being erected or planned, for example, the Pelamis

Wave Energy Converter. A 750 kW size unit is already in operation in Scotland. Nine wave

energy systems based on different technologies developed by European investors are being

tested under real sea conditions. Ireland, with the UK, Denmark, Sweden and Portugal have

invested very modest sums to the exploitation of ocean systems for power generation, with

support typically limited to just €2m. The forecast installed capacity in 2020 is 0.9GW and

1.7 GW in 2030; or just 1.1% of projected EU-27 electricity consumption.

The main barriers to the rapid roll-out of ocean/wave technologies at EU level are:

Infancy state of development and its specific operating marine environment;

Need for grid connections bearing in mind that offshore units will be quite some

distance from onshore connection;

Licensing at authorisation costs;

Maintenance and plant costs;

Need for engineering capacity; and

Full development costs beyond range of SMEs.


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4.11.14. Ocean Energy – Ireland/Northern Ireland

AEA Technologies estimates that the worldwide market for offshore wave energy devices

could be between €50 billion and €200 billion. 184 The 2005 Bacon/ESBI study calculated that

1,900 jobs would be created by 2020 if Ireland invested in ocean energy technology.185 It has

been estimated that the total wave energy resource could yield 48 Twh if all of the Irish

coastline alone were developed.186 The Irish Marine Institute has identified the medium

term practical resource as around 800 MW installed capacity. 11

Ireland is located at the centre of one of the most favourable climates for ocean wave

energy in the world. With a significant percentage of Europe’s coastline (but only 1% of its

population) this is a major renewable energy resource waiting to be tapped. Ireland has

third level research expertise in the areas of turbine design at University of Limerick, wave

tank model testing at the Hydraulics and Maritime Research Centre of University College

Cork and wave energy modelling at Queen’s University. In terms of prototype development,

there are currently three wave energy developers in Ireland namely Ocean Energy, Hydam

and Wavebob.187

In January 2008, a major programme of activity, grants and supports to develop ocean

energy in Ireland was announced by the Minister for Communications , Marine and Natural

Resources. Over €26 million in targeted funding will go to the sector over the next three

years. The Minister also announced a significant boost for the future of the sector with the

first-ever guaranteed price for wave energy. The initiative announced by the Minister will

include:188

€1 million towards a world class, state-of-the-art National Ocean Energy facility in UCC.

The Facility will now have an advanced wave basin for the development and testing of

early ocean energy devices.

€2 million to support to develop a grid-connected wave energy test site at Annagh/

French Point near Belmullet, Co. Mayo.

€2 million in grants in 2008 under the Ocean Energy Prototype Fund. This will help

developers to make their devices commercial.

The introduction, of a new feed-in-tariff under the REFIT scheme for wave energy of

€220 per MegaWatt Hour.

€500,000 in 2008 to establish an Ocean Energy Development Unit as part of Sustainable

Energy Ireland (SEI).

SEI’s Ocean Energy Development Unit will have a central role in overseeing this Programme.

184 Survey of energy Resources - TIDAL ENERGY, World Energy Council, James Craig, AEA Technology (2003). 185 http://www.greenparty.ie/news/latest_news/ryan_announces_26m_for_wave_power_research 186

http://www.oceanenergy.ie/market.html 187 http://www.marine.ie/NR/rdonlyres/86491414-3E7E-48E5-A0E1-287CA9191C61/0/OceanEnergyStrategy.pdf 188 http://www.ucc.ie/en/mandc/news/fullstory,48055,en.html

http://www.greenparty.ie/news/latest_news/ryan_announces_26m_for_wave_power_research

http://www.oceanenergy.ie/market.html

http://www.marine.ie/NR/rdonlyres/86491414-3E7E-48E5-A0E1-287CA9191C61/0/OceanEnergyStrategy.pdf

http://www.marine.ie/NR/rdonlyres/86491414-3E7E-48E5-A0E1-287CA9191C61/0/OceanEnergyStrategy.pdf

http://www.ucc.ie/en/mandc/news/fullstory,48055,en.html


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World First: Tidal Energy used for Commercial Electricity Generation in Strangford Lough

SeaGen is the name given to the 1.2MW tidal energy convertor that was installed in Strangford

Lough, Northern Ireland at the end of March 2008189

. Strangford Lough was chosen as the site for

the world's first commercial tidal generator because has a very fast tidal current, and at the same

time is fairly sheltered from bad weather which could hinder the installation procedure. It is also a

convenient place for an independent team of scientists to monitor the interaction of the system

with the environment.

The SeaGen components were manufactured in various locations in the UK and Europe. The

significant subsystems were tested at locations close to Marine Current Turbines office in Bristol

prior to being delivered to Harland and Wolff, Belfast, for final system assembly and preparation for

installation.

SeaGen will be owned and run by Sea Generation Ltd,190

which is the project company and is a

wholly owned subsidiary of Marine Current Turbines Ltd. ESB, Ireland’s national electricity company,

is investing £3million in Marine Current Turbines. In addition, ESB’s retail subsidiary, ESB

Independent Energy has signed a five year Power Purchase Agreement to buy all of the electricity

output from the SeaGen tidal facility which will be sold as part of its green energy offering to its

customers. ESB will be one of the first utilities in the world to provide tidal energy to its customers.

4.11.15. Geothermal Energy

The initial capital costs of installing a Geothermal Heat Pump system is usually higher than

other conventional central heating systems. However, under the Greener Homes Scheme,191

there are now grants available which will reduce initial costs significantly. A large proportion

of the outlay will be for the purchase and installation of the ground collector. The system is

among the most energy efficient and cost effective heating and cooling systems available.

Typically, four units of heat are generated for every unit of electricity used by the heat pump

to deliver it, and the payback is typically about 8- 10 years. The life expectancy of the system

is around 20 years. There are some geothermal spring sources (e.g. Blackwater valley

between Mallow and Fermoy) that could be further utilised on a local basis for space

heating. Current energy prices do not make retrospective district heating using geothermal

springs a cost effective option but it should be considered for new housing schemes in those

areas.

4.11.16. Combined Heat and Power (CHP)

The vast majority of Combined Heat and Power (CHP) users in Ireland qualify as auto-

producers i.e. they produce electricity for use on one single premises only. Only a small

number hold a licence to supply electricity. Therefore, for the majority of CHP users,

189 http://www.marineturbines.com/18/projects/19/seagen/ 190

http://www.seageneration.co.uk/default.asp 191 http://www.sei.ie/index.asp?locID=1220&docID=-1

http://www.marineturbines.com/18/projects/19/seagen/

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125

although the CHP unit is connected to and synchronised with the electricity system, payment

is made for any additional electricity units imported, but no payment is given for any surplus

units exported. CHP utilising absorption chillers has been installed by CES Energy at A&L

Goodbody Solicitors in the IFSC in Dublin (see case study below).

Trigeneration Installation in Office Block192

A&L Goodbody is one of Ireland's largest law firms with headquarters in an 11,000m2, five-storey,

purpose-built office block in the International Financial Services Centre (IFSC), Dublin. A&L

Goodbody has a policy of supporting environmentally sustainable technologies and it was in line

with this policy that they decided to install the 1MW tri-generation Combined Heat and Power (CHP)

plant. The tri-generation CHP plant provides nearly all the heating, air conditioning, water cooling

and electricity requirements for the building.

Prior to the installation of the system, the building's heating and electricity requirements were

provided by two sources, on-site natural gas-powered boilers and the national electricity grid. A&L

Goodbody's decision to embark on this tri-generation CHP project in 2004 was motivated by a

number of factors. A back-up electricity generating system was necessary. Choosing to install a CHP

system would mean that the capital investment in a new back up electricity generation system

would be avoided and there would be direct energy and CO2 emissions savings.

A&L Goodbody decided to employ an Energy Supply Company (ESCO), CES energy, to take over all

responsibilities related to the design, funding, build, operation and maintenance of the tri-

generation CHP project. The capital cost of the installation was borne by CES energy which owns the

unit and takes responsibility for all monitoring, maintenance and repair work on a 24-hour/365-day

basis.

Under normal operating conditions, the tri-generation system achieves an operating efficiency of

over 85% and provides the majority of the heating, cooling and electricity requirements of the

building. The CHP plant operates for 15 hours a day 7 days a week and has an annual fuel

consumption of approximately 9000 MWh of natural gas. The heating demand of the building ranges

between 180-400 kW with the largest demand in the winter months. The cooling demand is highest

in summer, around 600 kW, however, there is still 140 kW of cooling demand during the winter

months. The tri-generation solution is designed as thermal load follow. This means that when the

plant is operating, all the thermal requirements of the building are being provided by the CHP plant

and electricity generated over and above the law firm's requirements is exported to the national

grid. This amounts to approximately 1,250 MWh of surplus electricity being exported each year. At

peak demand in winter (i.e. between 5pm - 7pm) half the electricity generated by the unit is

exported; all export revenues accrue to CES energy. As well as exporting electricity CES energy are

looking into the possibility of exporting heat to other buildings nearby. Average electricity

generation capacity is about 600kW.

The CHP unit is completely synchronised with the national grid. If, for some reason, it cuts out, the

building automatically switches over to the national grid. The firm's ten 100kW natural-gas powered

boilers remain as back up and only operate when heating is required outside the standard operating

time of the CHP.

192 http://www.cesenergy.ie/case_studies.html

http://www.cesenergy.ie/case_studies.html


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Economic/Environmental Benefits

Economic

Previous Fuel Costs (Grid Electricity and Natural Gas): €600,000 /yr

CHP Operating/Fuel Costs: €550,000 /yr

Savings: €50,000 /yr

Environment

Fuel Displaced (approximate): 12 GWh/yr

CO2 Savings: 2600 tonnes/yr


The EU Directive, Electricity Production from Renewable Energy Sources (2001/77/EC),

commonly referred to as the RES-E Directive, commits Ireland to the production of 13.2% of

electricity demand from renewable energy sources by 2010.

The CHP Directive (2004/8 EC) provides for a range of measures to assist in the promotion of

combined heat and power (CHP).

The Sustainable Energy Act 2002 provides for the establishment of Sustainable Energy

Ireland on a statutory basis. The main functions of the Authority are to promote and assist

environmentally and economically sustainable production, supply and use of energy in all

sectors of the economy; to promote energy efficiency and renewable energy; and to

minimise the environmental impact relating to the production, supply and use of energy.

The Authority has a major role in implementing the National Climate Change Strategy.

The EU energy efficiency action plan: 20% reduction in energy demand by 2020, sets out 10

priority actions. These include minimum binding efficiency requirements by 2008 for new

electricity, heating and cooling capacity of less than 20MW. Consideration of efficiency

requirements for larger production units is also listed. Guidelines on best operating practices

to raise average generation efficiency for all plants and agree upon guidelines on best

regulatory practices to reduce transmission and distribution losses. A proposal for a new

regulatory framework to promote the connection of decentralised generation in 2007.

The 2007 White Paper on delivering a sustainable energy future for Ireland sets out goals for

security of supply, sustainability and competitiveness. It sets out about 200 different actions

which include the following targets in relation to sustainability of supply:

15% of electricity consumption from renewable sources by 2010, and 33% by 2020.

Energy Efficiency Action Plan to meet the EU action plan target of 20% energy savings by

2020, with an indicative target of 30% by 2020 to go beyond the EU target.

400 MW from CHP by 2010, and 800 MW by 2020, with particular emphasis on biomass

fuelled CHP.


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500 MW installed ocean energy capacity by 2020.

5% market penetration of renewables in the heat market by 2010, and 12% by 2020.

a biofuels obligation scheme on fuel supply companies by 2009. 5.75% biofuels market

penetration by 2010, and 10% by 2020.

The 2007 Bioenergy Action Plan for Ireland is incorporated into the White paper.

4.11.18. Trends

Energy prices have been rising steadily. Oil is currently well over US$100 a barrel.

Renewable energy is increasing its contribution to primary energy consumption in Ireland

(e.g. increase from 1.8% in 2003 to 2.2% in 2004). Wind, which accounts for most of this

growth, has now overtaken hydro in terms of renewable energy contribution. Biomass

(mostly domestic wood burning) remains the largest contributor. In absolute terms, the

primary energy contribution of renewable sources was 325 ktoe in 2004 representing a

growth rate of 18% relative to 2003 and a 94% increase (4.8% per annum on average) on

1990 levels. The estimated quantity of carbon dioxide avoided by renewable energy in 2004

was 1.5 million tonnes.193

Harland and Wolff in Belfast have diversified into emerging technologies, particularly in

renewable energy development, such as offshore wind turbine, wave and tidal power

construction. 194 There is a significant focus in the large multinationals (particularly the large

‘oil’ companies) and indeed indigenous companies, such as ESB, on diversification into

renewable energies to sustain and grow their business.

Flexible, coordinated and adequate electricity networks are needed to address mounting

network congestion, increasing deployment of renewable-fed and more efficient electricity

generation units and diffusion of dispersed generation installations. Alternative smart grid

technologies are being deployed or are under development; HVDC, FACTS, GIL, HTS wires.

The proposed introduction of smart meters into Ireland’s two million buildings is part of this

development.

Although there are synergies with other forms of renewable energy supply, they each have

their own distinctive technological and market attributes, and thus their own challenges and

perspectives for growth. The PV industry is not in competition with other RES-based

electricity generation industries. Biofuels development interacts strongly with the CASP and

forestry policies.

The IPO value in the energy technology boomed in 2006 with an increase of 156% measured

at global level. Globally, RES-E companies are on course to raise $13.7 billion this year. Solar

energy and biofuels are the primary driving areas. 195 In Denmark, VC investments in RES-E

193 Renewable Energy Development 2006, DCMNR/SIE, 2006. 194

http://www.harland-wolff.com/ 195 Lux Research, 2007 and New Energy Finance.

http://www.harland-wolff.com/


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have developed from being almost invisible to some 7% of investment activity. 196

Another forecast suggests that EU Cleantech VC activity rose from 8% of all VC investments

in 2003 to 19% in 2006. 197 However, US investment ($45 billion in 2006) is five times that

level.198

Cleantech VC firms are investing in the following industry segments:199

Emissions control and monitoring

RES-E

Energy storage (fuel cells, advanced batteries, ultracapicitors)

Energy efficiency products (lighting, sensors, automation)

Recycling and waste processing

Water purification and treatment, metering

The growing maturity of RES-E products in particular explains the confidence of VC investors.

In Europe, solar is attracting 59% of VC activity; wind 9%; and biofuels 17%.

4.11.19. Drivers

The requirement for new and renewable energy technologies is being driven by the world’s

needs to reduce greenhouse gas emissions in conjunction with the increasing global energy

demands. While policy is less important a driver in energy than in other sectors (notably

waste) nonetheless there is a range of issues that are key to the development of renewables

in Ireland:

Ireland’s commitments to the Kyoto Protocol.

Global warming resulting in climate change is having a fundamental impact on business

and is having a positive impact on growth in the EGS sector.

Depletion of fossil fuels has reached the point where some observers claim we have

already reached “peak oil”.

Security of Supply of fuel imports (oil, gas and coal) is driving governments and

corporations towards self-sufficiency in energy generation.

Significant price rises in gas and oil in last 5 years as a consequence of increasing

demand.

Social Influences including customer and shareholder expectations is influencing

Corporate Social Responsibility (CSR) which also impacts on investment decisions.

The Taoiseach announced at the 2008 Irish Energy Forum that the Government will invest

over €200 million in energy-related Research and Development, saying “Today’s

196

Vaekstfonden, 2007. 197 Report by Insead for the Federation of Belgian Employers; www.feb.be 198

European Cleantech Investment Report, Cleantech Network, 2006. 199 Insead Report Greening the Environment, February 2008.

http://www.feb.be/


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announcement is significant and shows our determination to honour our commitments in

this important area under the Programme for Government. Through Research and

Development Ireland can take a lead in developing environmental solutions and products.

This investment will achieve a win/win situation of improved competitiveness and

environmental performance. The €200 million will be made available over the next 5 years.”

Minister for Communications, Energy and Natural Resources said, “Today is a demonstration

of the cross-Government commitment to the new energy era. I am pleased today to launch a

report on energy efficiency, which shows that the benefits of energy efficiency to the Irish

economy far outweigh the costs. Energy efficiency is the least expensive and most intelligent

means of making substantial cuts in our fossil fuel bills and greenhouse gas emissions.

Initiatives such as smart metering, building improvements and peak demand reduction will

benefit the Irish economy to the tune of €3.6 billion. Notably, they will reduce our carbon

emissions by over 6 million tonnes.”

Opportunities and challenges for NI businesses are presented by the carbon emissions

targets identified in the NI Sustainable Development Strategy (2006),200 the NI Sustainable

Development Implementation Plan “A Positive Step” (2006)201 and the UK Climate Change

Bill.202 DETI NI has recently commissioned research into the impacts and opportunities for

businesses in Northern Ireland arsing from compliance with these targets.

The Department of Communications, Marine and Natural Resources is considering a report

prepared by the Irish Energy Research Council which deals with the approach that should be

taken towards basic and applied research to underpin new energy conversion, distribution

and technologies. Specifically, the Council has identified the following areas of focus: ocean

energy, energy in buildings, and sustainable bio-energy.203

4.11.20. Weaknesses

Over reliance on fossil fuels for heating, energy generation and transport and inertia from

previous governments on carbon-taxes, has made it more difficult for Ireland to prepare for

the changes required to comply with Ireland’s international greenhouse gas reduction

commitments. The majority of CHP producers do not have licences to supply electricity.

Stream-lining licensing could create the incentive for them to supply the national grid.

Coolpower Products Ltd

Drawing upon expertise extant in the area of electrical and electronic engineering, a number of

startup companies have focused on opportunities within the energy management arena. One such

company, Coolpower Products Ltd. has recently launched a patented energy and micro-generator

200 http://www.ofmdfmni.gov.uk/sustain-develop.pdf 201 http://www.ofmdfmni.gov.uk/implementation2_plan_16_11__06.pdf 202 http://www.sustainable-development.gov.uk/what/latestnews.htm#130307 203

Irish Energy Research Council, An Energy Research Strategy for Ireland, March 2008, page 26.


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manager that maximises the value of energy generated by grid-connected micro-generators and

minimises the amount and cost of energy imported from the grid.

The product, known as EMMA, prevents this loss by monitoring and comparing, in real-time, energy

generation with energy consumption and directing all surplus energy to local energy storage

devices such as hot water cylinders, storage heaters, heat pumps, fridges and even electric vehicles.

EMMA also uses inputs from smart meters to track time-based electricity tariff variations and

inputs from the likes of alarm systems and current sensors to determine when rooms or whole

buildings are in use. These enable EMMA to control circuits intelligently and to thereby minimise

electricity consumption and optimise grid-electricity demand profile.

This promising product is a good example of an innovative enterprise responding to the rapidly

changing situation with respect to energy efficiency and the longer-term prospect of micro-

generation forming a much larger part of energy provision in the future. The scale-up and route to

market for this type of product will be critical to its future success.

4.11.21. Barriers

Not having a tradition in heavy engineering in Ireland makes it unlikely to become a centre

for wave/wind turbine manufacture. Small population/market and low population density

(outside of the Dublin conurbation) is not attractive for large-scale CHP/district heating.

Maturity of the technology in some renewable subsectors (e.g. wind, anaerobic digestion,

bioethanol fermentation etc.) leaves Ireland with some catching-up to do to develop a

manufacturing base. No history of vehicle manufacturing means innovation is more likely to

happen elsewhere. Small electricity generators have had difficulty in selling to the national

grid and the situation of larger facilities in remote areas has also presented problems with

the capacity/availability of high voltage transmission lines in which to supply.

4.11.22. Opportunities – Wind Energy

The largest growth in renewable energy contribution in Ireland in recent years has come in

the form of electricity generated from wind power. The output from wind generation

increased by 44% in 2004 alone and by a further 46% in 2005. The total installed capacity of

wind farms in Ireland in December 2005 was 495 MWe. Wind energy has been touted as

one of the big sources of ‘Green Collar’ jobs in a number of countries over the last few years.

The wind sector currently employs around 64,000 people in Germany, around 21,000 in

Denmark and 35,000 in Spain according to national statistics204. As a rule of thumb,

employment can be gauged by 12 individuals employed per MW installed. Employment

projections for the EU-25 for the year 2020 indicate: 153,400 direct and indirect employees

for manufacturing, 27,400 for installation and 16,100 for maintenance.

Viewed like this, with a ratio of 3.55:1 jobs between manufacturing and post-manufacturing

activities, we can see the enterprise opportunity currently being missed in the absence of

204 “Wind energy – why businesses should say yes”. Christian Kjaer, EWEA, Climate Action, December 2007.


131

any direct wind energy manufacturing facilities on the island of Ireland.

A closer examination of the installed base of turbines in Ireland provides us with picture of

the major players:

Vestas 56.2%

GE 14.4%

Enercon 8.8%

Siemens 6.9%

Gamesa 5.2%

NEG 3.3%

Nortank 3.0%

None of these companies currently have manufacturing facilities in Ireland with the

exception of GE and Siemens who operate in completely different sectors. The global value

of turbine sales globally in 2007 was €18 billion; there cannot be too many other hi-tech

sectors of this scale where Ireland has such negligible presence. It also comes at a time when

the order books for wind turbine manufacturers are filled with lead times in the region of 4

years for some manufacturers. What is also certain is the fact that demand is not going to

diminish anytime soon. There are expectations of some consolidation among the

manufacturers soon which could result in a positive disruption to the supply chain network,

providing enterprise opportunities.

The challenge for Ireland inc. is to examine the wind turbine supply chain and carve out

areas where sustainable ‘Green Collar’ jobs can be provided. Taking a view of the total goods

and services involved in wind energy, there are a number of discrete components and steps

involved, broadly represented thus:

Planning – EIA – R&D – Turbine – Turbine rotor – Gearbox – induction generator –

Transformer – installation – commissioning – maintenance

As a first shot, Ireland inc. should use their existing networks to approach the manufacturers

above and, given the long lead-times being experienced, offer a fast-tracked manufacturing

plant proximal to sea-routes where capacity bottlenecks could be relieved extremely rapidly.

At the same time, the individual components making up the tier 2 and tier 3 supply chain

should be reviewed for suitability to establish manufacturing operations in Ireland.

Enterprise Ireland should also review these components and provide introductions for

indigenous firms to bid for supply contracts among the tier 1 suppliers, a very successful

policy adopted to service the computer industry in the 1980s and 1990s.

Taking the knowledge economy perspective, the existing capabilities in the sector should be

reviewed to examine the prospects of offering a turnkey design, commission, installation

and operation service to wind farm owners throughout Europe. This type of work is not new

to Ireland, ESB International have been providing this type of turnkey design for power


132

generating companies since the 1970s. Domestically, with an impending turbine population

of 5,000, we envision prospects for companies to outsource the installation and

maintenance of wind farms to dedicated service providers where the installed capacity will

provide a sufficient critical mass for this degree of specialisation.

Another major factor emerging is the fact that this amount of generating capacity will be

installed in areas with a poor grid network. SEI205 has estimated that 6,565 km of new

transmission lines for wind energy alone will be required. This is effectively double the

existing capacity of 6,800 km; we are looking at a scenario not faced since the electrification

of the state in the 1930’s. The transmission network and successfully attracting

manufacturing or services work with the turbines themselves offer huge sustainable

employment potential in the coming decades.

4.11.23. Opportunities – Ocean Energy

In October 2006, the Carbon Trust in the UK launched a new Technology Acceleration

project in marine energy called the Marine Energy Accelerator. This aims to accelerate

progress in cost reduction of marine energy (wave and tidal stream energy) technologies, to

bring forward the time when marine energy becomes cost-competitive so that significant

carbon emissions reductions are achieved. The project follows on from the Marine Energy

Challenge and the Carbon Trust report published in January 2006 which highlighted that

marine energy could supply up to 20% of the UK’s electricity needs. 206 The costs of marine

energy are currently higher than conventional and other alternative energy sources,

reflecting the early stage of technologies. However, the report found there is potential for

costs to reduce considerably in future and for the technologies to become competitive with

other generation forms.

4.11.24. Opportunities – Other Technologies

The priority technology pathways that were considered to be the most promising in the

2006 DCMNR/SEI report “Renewable Energy Development 2006” in the period to 2010 were

as follows: 207

• Co-firing in electricity generation – at peat-fired stations in particular. Biomass fuel is

competitive with peat fuel. Co-firing would serve to build the market by providing

strong, flexible demand for biomass fuels.

• Industrial wood residue CHP – many suitable sites exist and could employ well-proven

CHP technologies to produce both heat and electricity from on-site or imported fuels.

• Anaerobic digestion – offers important waste management solutions in certain

situations and could bring benefits in the short term

• Landfill gas – many suitable landfill sites exist, and if the resource is not exploited it will

205 Rick Watson, Agmet, Glasnevin 29 February 2008. 206

Future Marine Energy, Carbon Trust, 2006. 207 www.sei.ie/getFile.asp?FC_ID=1752&docID=28

http://www.sei.ie/getFile.asp?FC_ID=1752&docID=28


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be lost. This is a path to biomass fuelled electricity that is easy to capture in a short

timeframe. Several landfill gas energy systems are already in place

• Wood heat in buildings – a major opportunity for market growth though the delivery of

high quality energy solutions in a range of buildings, from houses up to large public and

commercial buildings

• Energy crops – attention is needed now to ensure development of this sector, which will

be the centre of bioenergy and biomaterials into the future.

The ESB’s proposed €1 billion investment in the installation of smart meters provides a

unique opportunity for Ireland to establish a centre of excellence in grid management,

including the management of non-dispatchable energy sources. The progression to smart

metering in grid management is essentially about software application to make the

hardware work. Given the scale of the ESB’s commitment there is considerable scope to

leverage this investment to the benefit of many sub-contractors. As a priority therefore, the

ESB should be asked how can enterprises with the necessary know how and skills currently

in Ireland get involved in their smart metering project.

An alternative way of implementing a energy-saving investment is to outsource it as a total

service package from a third party (the Energy Service Company - ESCO model). This concept

has been pioneered successfully in Finland and should be considered in Ireland as it could

enable distributed generators realise the potential of their resource.

Bioenergy chain management is another possible opportunity. Ireland will be a technology

taker in terms of bioenergy technology, second generation in particular. But supply chain

remains an issue in the collection and processing of the resource. This will certainly be the

case with wood residues and forestry becoming a significant potential asset.

4.11.25. Conclusions

Policies aimed at technological innovation include technology push instruments such as R&D

policies and market/demand-pull instruments. A successful introduction of a new

technology into a mature market crucially depends on both elements and their correct

timing in the process. Market-pull instruments can include command-and-control targets

for energy efficiency or renewable combined with financial support schemes.

Potential opportunities in ocean energy (wave and tidal) should continue to be supported as

our coastline presents us with a natural advantage and we still have early mover potential in

this sub-sector. While there is a backlog of up to four years for turbines from some suppliers

there is no strong argument in favour of manufacture here due to our relatively small heavy

engineering tradition (except for Harland & Wolff in Belfast where off-shore wind and tidal

energy structures are assembled). There is some tradition of domestic boiler manufacture

(gas and oil-fired) in Ireland and the opportunity to manufacture biomass boilers here could

be an area of employment creation. The total energy usage of a development should be a

consideration in the planning process. The technology (hardware and software) to optimise


134

multiple renewable energy systems (solar, CHP, wind, heat pumps etc.) on a micro

(household) scale is an area of growth potential.

4.12. Waste Management

Products, systems and services for the minimisation, collection, treatment, segregation,

recovery, recycling and disposal of waste that may include paper, organics, metals, glass,

plastics, demolition and construction wastes, electrical and white goods.


The approach to waste management on the island is based on the internationally adopted

hierarchy of options that has been embraced by the EU since 1989 as the cornerstone of its

waste management policy. The most preferred option is prevention and minimization,

followed by re-use and recycling, energy recovery and, least favoured of all, disposal.

Waste management policy is set at EU level and a significant body of legislation has been

developed since the adoption of the first Waste Framework Directive in 1977. 208

Ireland and Northern Ireland have adopted the proximity principle, which says that waste

should be treated as close as possible to the source of generation. 209 Within Ireland, inter-

regional movement of waste has been allowed to avoid the implementation of the Regional

Waste Management Plans excessively restricting the establishment of economies of scale for

infrastructure and markets. However, large quantities of waste continue to be exported

primarily because of infrastructure deficits in relation to facilities and indigenous market

size.

4.12.2. The Waste Management Sector

It is estimated that there are some 250 companies involved in the waste management sector

in Ireland and approximately 75 in Northern Ireland. 210 211 In addition, local authorities are

active players in this sector. The recycling sector (NACE 37) comprised 41 companies (2006),

employing 530 with a turnover of €139m,212 demonstrating their SME nature with an

208 A full list of EU waste legislation can be found on http://ec.europa.eu/environment/waste/legislation/index.htm 209 The proximity principle is set out in EU Framework Directive 91/156/EEC. Member states must establish an integrated and adequate network of disposal installations so that waste can be disposed of in one of the nearest appropriate installations, by means of the most appropriate methods and technologies to ensure a high level of protection for the environment. 210 Proxied from UK data - Department of Trade and Industry. Emerging Markets In the Environmental Industries Sector, November 2006. 211

The KOMPASS Business Directory lists 100 companies involved in waste collection (excluding local authorities) and 104 engaged in recycling. In addition, 25 companies are listed as being providers of waste equipment and machinery. 212 2006 Census of Industrial Production, CSO, December 2007.

http://ec.europa.eu/environment/waste/legislation/index.htm


135

average employment of 13 persons and turnover of €3.4 million. Some 561 IPPC and waste

licenses have been issued by the Environmental Protection Agency (EPA).

On the basis of feedback from the sector, it is estimated that the value of the waste

management market in Ireland is in the range €1.2bn to €1.6bn, and the corresponding

figure for Northern Ireland is estimated at £250 to £300m.

These estimates contrast sharply with those contained in the Ernst & Young report on the

size of the European EGS sector, which valued Ireland’s total EGS sector at €1.21 billion

(2004), with just €215m being allocated to solid waste and recycling. 213 The total UK market

for waste management was estimated to be £8.1 billion in 2005, which extrapolates to a

Northern Ireland market of £211m. 214

The market in Ireland is fragmented with the top five companies accounting for just 25% of

the total market. Quite a number of companies (Greenstar, One51 (TechRec), Panda Waste,

Oxigen, Bord Na Mona (AES), Thorntons Recycling, Mr Binman, Indaver Ireland, Enva and

Veolia) are of a sufficient scale to use their skills and know how to take advantage of the

growth in this sector in the medium term and to expand their businesses in export markets.

Levels of profitability vary widely in the sector. Greenstar, for example, probably the largest

private player in the industry, made a profit of €27.4m on a turnover of €134.5m (2006).

While the local authorities operate the majority of Ireland’s municipal landfills, the private

sector is the predominant service provider for commercial, industrial and hazardous waste

management, 67% of the municipal waste collection capacity and nearly 50% of the direct

kerbside household waste collection 215.

It is widely expected that there will be further consolidation within the sector and this

should be welcomed as it will help create waste companies capable of competing

internationally in the provision of services. The key players in the sector believe it is critical

to reach scale and many expect that two or three dominant companies will emerge.

Certainly the area of waste management shows the largest number of mergers and

acquisitions in 2007. This reflects the continuation of a process commenced over the past

number of year where the larger, well-funded waste management companies have acquired

smaller regional operators or specialist waste contractors. Once deregulation commenced

with domestic and commercial waste and the requirement for additional separation of

waste streams, a plethora of companies were established up in this area. There has been a

steady move towards consolidation as the ability of the small regional operators to compete

with the infrastructure of the large waste management companies becomes less and less.

For example, Greenstar has undertaken 14 acquisitions since 1999. There is a concern

among some companies in Northern Ireland that a similar consolidation could arise, with the

remaining smaller operators being ‘squeezed out’ by dominant players, or that if central

213

European Commission - DG Environment, Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU. Ernst & Young. September 2006. 214 Department of Trade and Industry (UK) study Emerging Markets in the Environmental Industries Sector, November 2006. 215

Private communication, Irish Waste Management Association, 2008.


136

procurement is adopted there will be no scope for smaller business. A contrary view is that

such as larger grouping would provide opportunities for a higher level of expertise with a

longer planning time horizon.

While all operators feel frustrated at the absence of a clear regulatory framework, feedback

from the sector is generally positive about growth prospects and new business

opportunities. Greenstar has been especially proactive in seeking to stimulate debate and to

inform waste policy decisions on a variety of issues confronting Ireland. 216

4.12.3. The Regulatory Framework - Ireland

Legislation: Ireland has transposed the waste management provisions of the relevant EU

Directives by means of primary legislation.

Overall: Policy has been guided by key statements, e.g. “Delivering Change” (2002), “Taking

Stock and Moving Forward” (2006), various waste related Plans, e.g. Regional Waste

management Plans, Plans for specific streams, e.g. hazardous waste, biodegradable waste,

etc. Producer Responsibility Initiatives have been introduced, e.g. packaging, waste electrical

and electronic equipment, end of life vehicles and a major public awareness campaign i.e.

Race Against Waste has been implemented. The primary aim of the National Waste

Prevention Programme (2004-2008) was to reverse trends in waste production, decouple

waste generation from economic growth and minimize the environmental impact of waste.

In August 2006, the Minister for the Environment, Heritage and Local Government published

a consultation paper on options for future regulation of the waste sector. Submissions were

invited on whether there is a need for a regulator for the sector, if so on what model of

regulator might be most appropriate and on what powers any such regulator should be

given, the role of local authorities as regulators and/or direct service providers, waivers,

universal service obligation, recycling and other obligations on private collectors, etc. The

government’s response to the more than fifty, many very detailed, submissions is eagerly

awaited by the industry.

Hazardous Waste: A proposed National Hazardous Waste Management Plan published by

the EPA set out a framework for a revitalized approach to hazardous waste prevention,

collection and management.

Biodegradable Waste: The publication of the National Strategy on Biodegradable Waste has

set further recycling priorities.

Public Capital Expenditure: Some €753m in public funding has been approved under the

NDP, with investment in the ’legacy’ issues of old landfill sites the priority. However, there

216 Waste Policy, Planning and Regulation in Ireland, Final Report for Greenstar by Eunomia Research and

Consulting Ltd., in association with TOBIN Consulting Engineers, April 2007.


137

are no details provided as to project priorities and the timescale for delivery of the proposed

measures.

International Review: A Request for Tenders for a consultancy study to carry out an

international review of waste management policy has been published (February 2008). The

terms of reference suggest that the review will identify possible policy changes and, in

addition, examine institutional and organizational arrangements which could assist in

achieving Ireland’s policy goals. Of critical importance, given divergent views within the

industry, the study will evaluate the scope for the extension of the use of proven

technologies for the mechanical, biological, chemical or thermal processing of waste (or

combinations thereof). 217 In addition, the OECD will conclude a case study on waste

management in Ireland and this too will be completed before the end of 2008.

Future Policy Change: In the longer term for both jurisdictions, the proposed revision of the

Waste Framework Directive and the introduction of a Sustainable Consumption and

Production Policy may shift the emphasis to the prevention of waste and may generate new

opportunities, either in providing consultancy services or in cleaner technologies that

produce less waste. The proposed Directive would merge legislation on waste and

hazardous waste and simplify it, reflecting technological progress and also bring its

provisions up to date. It would introduce the life-cycle approach into waste policy to focus

on key environmental impacts and on improving the way we use resources. A revised

definition of recovery is set out which confirms that the basis for this definition is the

substitution of resources. The definition of waste is unchanged in the proposal, but it does

allow for future clarification of when certain wastes cease being wastes by specifying criteria

for those waste streams that meet certain specified tests. The Directive would introduce

minimum standards or a procedure to establish minimum standards for a number of waste

management operations and would improve the recycling market by setting environmental

standards that specify the conditions under which certain recycled wastes are no longer

considered waste but high-quality secondary materials instead. There is also an aim that by

2010 a product eco-design policy would be formulated to address both the generation of

waste and the presence of hazardous substances in waste, with a view to promoting

technologies focusing on durable, re-usable and recyclable products.

4.12.4. The Regulatory Framework – Northern Ireland

Legislation: Northern Ireland has transposed the waste management provisions of the

relevant EU Directives by means of primary legislation. The key legislation is the Waste and

Contaminated Land (NI) Order. The most recent updating regulations amended the Order to

bring agricultural wastes and mine and quarrying wastes into the controlled waste system. 218

217 Final Report for Greenstar by Eunomia Research and Consulting Ltd., in association with TOBIN Consulting Engineers, February 2008. The report argued that MBT is the only internationally proven technology solution that can play a major role in helping Ireland meet its EU waste targets. AEA Technology, in a report for the European Commission has evaluated technology options. 218 The Waste Management Regulations (Northern Ireland) 2006.


138

Overall: Towards Resource Management, the Northern Ireland Waste Management

Strategy 2006 – 2020, was published in 2006.219 The primary aim of the Waste Management

Strategy is to manage waste and resources effectively. This means using material resources

in a way that reduces the quantities of waste produced and, where waste is generated, to

manage it in a way that minimises its impact on the environment and public health and

contributes positively to economic and social development.

Hazardous Waste: The Northern Ireland Hazardous Waste Forum consists of key

stakeholders and has been established to advise on a way forward for hazardous waste

reduction, recovery and management. The Forum published its first Action Plan in June

2004,220 with objectives and actions focused in four areas, namely the regulatory system;

communications and awareness raising; reduction, reuse and recycling; and, provision of

facilities.

Biodegradable Municipal Waste: The Strategy sets out the Department’s policies with

respect to the diversion of Biodegradable Municipal Waste from landfill to meet EU Landfill

Directive targets. Key to this is the development of significant new waste management

infrastructure with considerable cost implications. A Waste Infrastructure Task Force was

established to make recommendations on the type of infrastructure required, likely costs,

funding mechanisms and planning and delivery, and the report of the Task Force was

published in December 2006. 221

Public Capital Expenditure: The Strategic Investment Board has identified a capital

investment requirement of up to £285 million. Northern Ireland’s Investment Strategy 2008-

2018 predicts a total investment of £436m over this period, with £256m being spent in

2008-2011 and the balance of £180m in the remainder of the period.

Strategic Review: A Strategic Waste Board has been established and Waste Infrastructure

has been designated a supported programme by the Strategic Investment Board for

Northern Ireland.

Future Policy Change: The EU has adopted thematic strategies on the sustainable use of

natural resources and on the prevention and recycling of waste. The strategy on prevention

and recycling of waste includes the introduction of life cycle thinking into waste policy and

this could potentially lead to profound changes to policies and practises as the greenhouse

gas emissions or Carbon Footprint associated with waste and resource management systems

and technologies becomes a key issue.

4.12.5. Trends

219

Towards Resource Management, The Northern Ireland Waste Management Strategy, 2006. 220 Hazardous Waste in Northern Ireland – An Action Plan for its Environmentally Sound Management, June 2004. 221 Report of the Waste Infrastructure Task Force, December 2006.


139

The nature of waste management continues to change at a rapid pace. For example, there is

an increased emphasis on promoting the idea of waste as a potential resource. While good

progress is being made in relation to recycling, significant problems remain on the waste

disposal front with the top priority to divert waste from landfill. Other important trends in

waste generation and management, as follows, have been identified: 222

The quantity of waste being recycled continues to grow at a significant pace; with the

quantity of municipal waste recycled up 18% year-on-year (2005/2006). Some 36% of

municipal waste is now recycled; exceeding the national (2013) target of 35%.

Continuing strong increases in recycling and recovery remain overshadowed by

increased waste generation and landfill; volumes to landfill were up 8% year-on-year

(2005/2006). There are doubts if it will be possible to achieve the national target of 50%

diversion of household waste from landfill by 2013.

While the quantity of packaging waste is also increasing, the 60% recycling target for

packaging and packaging waste (2011) should be met.

Household WEEE collection (at 7.4kg) is nearly twice the requirement set out in the

WEEE Directive.

Waste recycling infrastructure (as opposed to export) is improving, with a 40% year-on-

year increase (2005/2006).

It is unlikely that the 2010 target to reduce biodegradable municipal waste by 450,000

tonnes will be met due to the lack of the full implementation of the National Strategy for

Biodegradable Waste.

Many of Ireland’s 29 landfills that are licensed to accept municipal waste are new and

have significant capacity. However, this capacity cannot cope with the growing volume

of municipal waste. Two proposed incinerators have been licensed but construction has

not begun. Mechanical treatment of residual waste is on the increase. The subsequent

biological treatment stage is not yet in use. Ireland’s non-compliance with the EU’s

Landfill Directive and the absence of a clear national strategy on landfill options is

inhibiting investment decisions.

Construction and demolition waste is at a record high level (17m tones) but reported

recycling rates are down, particularly in relation to the non-soil and stone fraction. 223

Hazardous waste generation has decreased slightly.

The potential allocation of waste to the proposed incinerator in Dublin will divert very

large volumes from materials recovery or landfill, though this issue is still subject to

argument.

The latest estimate waste arisings in Ireland (excluding agricultural waste) are as follows:

Table 4.8: Waste Arisings – Ireland, 2006

Waste Category Tonnes %

222 National Waste Report (2006), Environmental Protection Agency, 2007. 223

Ibid, National Waste Report (2006), Environmental Protection Agency, 2007.


140

Construction and demolition waste 16,819,904 54.8

Mining and quarrying waste 4,782,614 15.6

Manufacturing waste 3,818,711 12.4

Municipal waste 3,384,606 11.0

End-of-life vehicles and scrap metal 744,136 2.4

Contaminated soil 406,904 1.3

Energy, gas and water supply waste 333,341 1.1

Hazardous waste 314,072 1.0

Urban wastewater sludges 59,827 0.2

Drinking water sludges (wet weight) 30,047 0.1

Drinking water sludges (dry solids) 9,987 0.0

Dredge spoils5 0 0.0

Total 30,704,149 100.0

Source: EPA, National Waste Report 2006, EPA 2007

The following is the corresponding data for Northern Ireland:

Table 4.9: Waste Arisings - Northern Ireland, 2006

Waste Category

Tonnes %

Construction, demolition and excavation waste 2.5-3.75 MT

(3.125)

64

Mining and quarrying waste N/A

Commercial and Industrial Waste 635,000 13.1

Municipal waste 1,052,234 21.7

End-of-life vehicles 56,900

Hazardous waste 47,400

Agricultural waste (non-organic) 41,000 1

Packaging 4 – 500,000

Tyres 16,100

Total (C&D&E, C&I, MSW, AG) 4,853,234

Source: Towards Resource Management. Volume 2: Waste Stream Summaries

Municipal waste is collected with possible prior segregation or subject to post-collection

segregation. In principle, there are three broad fates for collected municipal waste: landfill,

incineration with or without heat recovery, or material recovery (recycling). The majority of

municipal waste in Ireland is landfilled, with improving recovery rates and no incineration at

present. Materials separated for recycling are largely exported for processing, with the

demise of local steel, paper and glass processing capacity. There is a policy objective to

develop markets for recycled material, but with notable exceptions (e.g. Wellman, Shabra,

TechRec), this is absent.

In Northern Ireland, there is a perceived division between larger multi-national operators


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with a traditional approach to waste management and indigenous SMEs that are more

focused on resource recovery with innovative approaches and technologies.

4.12.6. Drivers

Government waste policy and compliance with EU Directives have been the key drivers to

date; specifically, the Landfill, WEEE and Packaging Directives. Initially, restrictions on landfill

capacity, the requirement to upgrade landfills and obligations to recycle packaging

prompted a major rise in the cost of waste disposal and the formation of private service

providers. Investment in landfill capacity has reduced this driver somewhat, though cost

remains a concern and is now the critical driver, after legislation. There is a view among

some of the waste management providers that the full cost of waste has still not been

identified by waste producers and that this inhibits the adoption of less traditional waste

management practices and technologies. The scheduled escalation of the landfill tax in

Northern Ireland will increase the costs of disposal relative to other management and

reprocessing options.

The application of the Landfill Directive will require the diversion of biodegradable

municipal waste from landfill. 224 Using the 1995 quantity of biodegradeable waste as a

basis, the targets for Ireland for the quantity to be landfilled as a proportion of the 1995

figure are:

Table 4.10: Targets for landfilling

Year Target

July 2010 (with derogation) 75%

July 2013 (with derogation) 50%

July 2016 (without derogation?) 35%

These targets translate into the following estimates; 225

Table 4.11: Treatment Targets Year Managed organic

BMW

Biological treatment

target (tonnes)

Residual treatment

target

(tonnes)

Total treatment

(tonnes)

2004 746,532 49,578

2005 744,685 47,802

2006 819,919 64,725

2010 966,003 338,129 308,904 647,033

2013 964,060 414,546 438,190 852,736

2016 921,104 442,129 499,762 941,891

Achieving these targets will require significant investment.

A future driver will be the need to reduce the level of GHG emissions from landfills which is

224 Directive 1999/31/EC. 225 Hitting the Targets for Biodegradeable Municipal Waste, Ten Options for Change, EPA, January 2008.


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currently 3% of the national total. This will provide a further incentive to segregate collected

waste, whether at source or subsequent to collection, prompting demands for additional

outlets. While the existing practices in response to current requirements may be relatively

“mature”, management of biodegradeable waste will represent a step change in demands

and one that will not be easily accommodated by export. Local solutions will be required. In

addition, compliance with Ireland’s stricter climate change/RES targets post-2012 may

encourage a greater use of energy from waste solutions. In relation to Northern Ireland, the

carbon agenda (UK Climate Change Bill) is also starting to impact on waste and resource

management decision-making in the UK, and this influence will continue to increase.

However, there is a lack of awareness of these forthcoming impacts in Northern Ireland.

Full compliance by Ireland with the EU’s Packaging and Packaging Waste Directive

(94/62/EC) by 31 December 2011 will increase the pressure on packaging collection and

recycling. In addition to better recycling, EPA have suggested that a targeted approach be

undertaken to reduce the quantity placed on the market in an attempt to take an alternative

approach to increasing the percentage achieved.

The desire to segregate waste and to apply the “pay by use/weight” approach has led to the

development of improved waste handling and accounting systems. This expertise may be

provided as a service to other markets, e.g. Eastern Europe.

Specific legislation, e.g. the WEEE Directive and subsequent national legislation has provided

stimulus for particular waste streams.

Finally, increasing waste costs that impact on company competitiveness is a concern which

has been articulated on many occasions by the National Competiveness Council.

4.12.7. Weaknesses

In the course of interviews with companies in the sector, the main concerns expressed were

uncertainty in policy and the time required to bring projects to fruition. Thermal treatment

with energy recovery is the expressed preferred option for dealing with residual waste after

achieving ambitious targets in respect of waste prevention, recycling and recovery and is

reflected in the regional waste management plans, for which the local authorities have

statutory responsibility. These waste-to-energy plants will be provided as entirely private

sector developments or by way of public private partnership. At present, there are a

number of proposals, led by Indaver, for thermal treatment (waste to energy) plants, but

none of these have entered even the construction phase. Mechanical Biological Treatment

(MBT) has been introduced in a number of localities and has received some positive

comment. A review of national waste policy with reference to international best practice

has been announced, with the possibility that current policy will be changed.

Private operators have also expressed concern about the apparent ability of local authorities

to control the waste market through their adjustment of the prices charged by their own


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landfills and the potential to direct the fate of the waste (“flow control”).

Waste is largely exported for recycling, due in large part to the absence of an indigenous

reprocessing infrastructure. Economies of scale are most often suggested as the reason for

this deficiency, since there is free movement of waste for recovery and the Irish market is

small in European terms. In Northern Ireland, collection and disposal (to landfill) is

dominated by the local authorities.

Inertia, familiarity with existing practice and lack of knowledge of innovative and emerging

technologies among local authorities has been expressed as weaknesses in Northern Ireland.

A risk-averse procurement process and a sense of needing to take rapid and certain steps to

prepare for the Landfill Directive favours maintaining the status quo of technology. The

existing waste management planning structure is under review and the potential to

consolidate the existing three planning groups into a single entity has led to uncertainty in

relation to future policy.


Forfás has published a baseline assessment of the waste management sector. 226 This

benchmarking analysis confirmed that Ireland performs poorly relative to a selection of

competitor countries in meeting the waste management needs of enterprise. The Forfás

Report also addressed waste treatment options with reference to international benchmarks.

TECHREC IRELAND

Techrec Ireland Ltd is engaged in the recycling and materials recovery of waste electronic and

electrical equipment (WEEE) in its state-of-the-art plant in Parkwest, Dublin. The driver for its

establishment was the planned implementation of the WEEE Directive in Ireland. TechRec Ireland

Ltd is a subsidiary of One51 Ltd. - the majority shareholder. Immark AG of Switzerland (which is now

majority owned by One51 Ltd.) provided the technology know how for the operation. One51 is a

diversified group with a focus on waste, sustainable energy and associated support services. Immark

AG is the dominant service provider of WEEE recycling facilities in Switzerland and also operates a

number of large WEEE processing facilities in other European countries. In addition to having an EPA

Waste Licence and a Waste Permit from Dublin City Council, TechRec has ISO certification for its

environmental, quality and occupational health and safety management systems. TechRec Ireland

has invested in facilities to disassemble and recover components and materials from WEEE.

Collected waste products are segregated for mechanical or manual processing. Those subject to

mechanical processing are mechanically broken with the residue separated before further size

reduction and separation. Materials e.g. plastics, glass and metals are then exported for specialised

recovery or directly for reuse. Hazardous components are segregated before they could be mixed in

the breaking stage. In addition to providing the service of disassembly, destruction and materials

recovery, TechRec provide an advisory service to business that wishes to establish a self-compliance

scheme. Furthermore, they have developed software to track the path of received products,

226

Forfas, Waste Management Benchmarking Study, June 2006. An earlier report (July 2003) made very similar points.


144

facilitating the reporting of waste treatment and fate and confirming destruction where required.

TechRec (NI) Ltd., is the sister company of TechRec Ireland Ltd., and is the first fully licensed

refrigeration recycling plant on the island of Ireland. Together they provide an example of an all-

island solution to the difficulty of economies of scale. The WEEE collection service in Ireland is

dominated by two compliance schemes: WEEE Ireland and the European Recycling Platform.

Together they have been successful is surpassing the required recycling collection target for WEEE.

However, a high proportion of the remaining WEEE is exported to non-EU countries where there

could be concerns about the quality of waste management. Since the refrigerator recycling is

conducted in Northern Ireland, movement of such material requires conformity with the Trans

Frontier Shipment regulations which impose an additional administrative burden and cost.

LESSONS:

The business opportunity arising from the up-coming implementation of the WEEE

legislation was the primary driver for the investment.

The investment made was from internal company resources; there was limited involvement

by Enterprise Ireland.

The lead time from initial business plan to plant commissioning was 4 years.

Technical expertise has been provided from continental Europe.

The technical service (materials recovery) is complemented by management services

(compliance advice and waste tracking).

The company is subject to regulatory (EPA, Dublin City Council) and voluntary (ISO)

oversight (“certification” / “verification”), as well as customer examination.

An all-island solution has provided an economy of scale, but is inhibited by frontier-crossing

requirements.

If restrictions were imposed on the un-controlled export of WEEE outside the EU, TechRec

and other similar plants could expand their export business.

BRYSON HOUSE

Bryson House has grown from a small charity providing environmental advice to the largest provider

of kerbside collection systems in Northern Ireland (approximately 60% of the market). Bryson

Recycling is a joint venture trading company equally owned by the Bryson Charitable Group,

Northern Ireland’s largest community-based charity and ECT, the UK’s largest community recycling

provider. Bryson is a social enterprise and has recently extended its operations into Ireland. The

company started with the Cash for Cans programme which was established in 1993 and provided the

opportunity to become involved in the Kerbside programme which was launched in April 2001 and

coincided with the opening of the Bryson House Recycling Materials Recovery Facility in Castlereagh.

While the vast majority of its income is from local authority recycling contracts, Bryson has recently

moved into commercial collection and recycling, The company currently employs 200 people, with

an annual turnover £8m, projecting to £9m in 2008/2009. The focus of the business is on resource

recovery rather than landfill.

LESSONS

This, originally small, operator was active in the market and identified a need for a new

service – collection and processing of recyclables on a large scale for local authorities.

It has partnered with a larger, UK-based, entity delivering a similar service and with a


145

similar management mission (social economy).

The landfill tax increases disposal costs and favours recovery.

Legislation has imposed recycling targets on local authorities.

A buoyant market for recycled materials is an important income stream and benefits the

cost effectiveness of recycling.

Waste Management (www.wm.com)

This US company deals with the waste of its 22 million customers and produces more renewable

energy each year than the entire North American solar industry. It strategic goals to 2020 include:

increase waste-based energy production; increase in the volume of recyclable materials; investment

in clean technologies; and preserving and restoring more wildlife habitat. It operates 33 landfills and

hopes to increase this number to 100 by 2020. To increase the volume of recyclable materials, the

company uses a profitable single stream recycling technology. New areas of business include

ewaste, and construction and demolition recycling. In partnership with Sony, Waste Management

has developed an eCycling Programme aimed at providing a drop off within 20 minutes of 90% of

population centres. The company is investing in the next generation of landfill technologies that

could produce electricity, create more space in landfills, and make diesel from landfill gases. Waste

Management’s consulting subsidiary works with customer companies to reduce their waste streams.

According to the CEO of Waste Management ‘…..where most see waste, we see opportunity.’

LESSONS:

Scale is important in the waste business.

Waste companies have the potential to offer environmental advisory services to their

clients.

Waste companies should be exploring the feasibility of investing in waste-to-energy plants.

A waste company that is allowed to operate collection points increases its load.

One example of an environmental technology supported by the WRAP programme relates

to the process of separating brominated flame retardants (BFRs) from waste electrical and

electronic equipment (WEEE) polymers.227 The work indicates that the Creasolv process for

extraction of brominated flame retardants from WEEE polymers has potential to be

commercially viable in the UK context at a throughput of 10,000 tonne/year. The Creasolv

process was originally developed by Fraunhofer IVV in Germany and has been modified

further in the course of this project. The Creasolv process will remove most BFR types from

styrenic WEEE polymers. Work done for this project has shown that styrenic polymers

constitute over half of collectable WEEE polymers and that they contain the great majority

of the BFRs found in WEEE thermoplastics. It is has not been tested with the newer BFR

types such as brominated epoxy oligomers because these are not yet found in significant

quantities in real WEEE. A second process called Centrevap has also been developed in the

course of this project and tested at technical scale. Tests have shown that it cannot achieve

227 www.wrap.org.uk WRAP works to encourage and enable businesses and the consumers to be more efficient in their use of materials and recycle more things more often. It has a budget of £79m (2008).

http://www.wm.com/

http://www.wrap.org.uk/


146

significant reductions in BFR content. However it does offer good potential as a robust,

flexible and relatively cost-effective process for removal of insoluble impurities down to

submicron size from a wide range of polymer types. Both processes should be able to

compete with landfill disposal or incineration (£35/te gate fee) as treatment methods for

segregated polymer streams, Creasolv for BFR removal, and Centrevap for removal of other

insoluble impurities. They will compete with export of the BFR-containing polymer outside

the EU (current sales value of around STG£100/te) if the finished high grade compounded

recyclate can be sold at about 80% of virgin compound price. Environmental impact

comparisons conducted during the project indicated that both of the recommended

processes have a net environmental gain across all environmental impact categories and

that the proposed treatment routes are a substantially better environmental option than

landfill and incineration with energy recovery.

4.12.9. Barriers

A key concern expressed by companies in the waste management sector is the issue of

unfair competition due to the dominant position held by local authorities: they are waste

management service and facility providers, regulators and planners. The Irish Waste

Management Association (IWMA) has stated that this situation has created inefficient and

uneconomic waste management services and delays in the delivery of necessary waste

management infrastructure. The IWMA also pointed out that the sector is controlled by 15

regulators: the EPA, An Board Pleanala, the Competition Authority, the new National TFS

Office, the Health & Safety Authority and ten regional waste authorities, which impose a

significant regulatory burden on business. The Dublin local authorities challenged these

assumptions by commissioning a report which argues that from a competition policy

perspective household waste collection constitutes a separate product market. 228 In

addition, this report argues that the household waste collection market is a natural (local)

monopoly. Both of these conclusions are consistent with the national (e.g. Competition

Authority) and international (e.g. UK Office of Fair Trading and Organisation for Economic

Cooperation and Development) literatures though the IWMA does not accept this.

With regard to the appropriate public policy response to the existence of a natural (local)

monopoly, this report considers and rejects as unnecessarily inefficient the competition-in-

the-market option. As such, this report argues that local authorities should be permitted

(indeed encouraged) to enforce exclusive rights with respect to household waste collection

in a pro-competitive manner. This conclusion is also consistent with the relevant national

and international literatures. Finally, it is argued that the actual identity of this single

provider (i.e. public or private) is of secondary importance compared to the institutional

environment within which the actual provider subsequently operates. However, this issue

remains a major concern of the private waste management sector in Ireland who feel the

lack of clarity and resolution of the dual role of local authorities (regulator and operator) in

waste management is a significant impediment to their strategic decision making.

228

Dr. Francis O’Toole, Household Waste Collection: An economics of Competition Policy Perspective. Trinity College Dublin.


147

The local authorities have additional competitive advantages in that unlike private operators

they do not charge VAT (at 13%), and are in receipt of funding from the Environment Fund

and Public Capital and current expenditure.

The IWMA has also stated that ‘the waste sector is characterized by a raft of unconnected

national regional waste plans dreamt up in isolation by various regulatory bodies and state

agencies.’ 229

To date, despite calls from the IWMA there has been no serious attempt to explore and

develop opportunities for an all-island waste management market.

The planning process, notwithstanding the enactment of the Strategic Infrastructure Act

2006, continues to delay the implementation of critical infrastructure projects.

The motor industry has argued that the way the End of Life Vehicle (ELV) Directive has been

implemented - by requiring registration in each local authority area – is cost ineffective and

will not encourage any significant investment in ELV technologies and processes. 230


Ireland has the highest level of municipal waste generation per capita in the benchmark

countries assessed in the Forfás Report. While this could be viewed as a problem, in reality it

is a business opportunity. To date, policy-makers have not looked at the crisis in waste

management in Ireland as a business opportunity.

The vast majority of Ireland’s recyclable materials are exported for further treatment; some

1.6m tonnes were exported in 2006.231 The cost of transporting these materials abroad adds

to the above-average cost of waste in Ireland. This suggests that feasibility studies should be

completed on the setting up of all-island recycling, materials recovery and treatment

facilities for all waste streams. One such study (on paper) has been completed but not yet

implemented. In April 2007 the Government launched the Market Development Programme

for Waste Resources 2007 – 2011. This aims to promote more recycling in Ireland of

recovered waste resources, focusing on organics, paper and plastics in particular, e.g.

Sharma Plastics. The €13m Programme is to be sourced from the Environment Fund (€11m)

and the private sector (€2m). A tender for the implementation of the programme was

issued by the D/EHLG in February 2008. Re-processing of selected streams on the island is a

potential opportunity. Where recycled materials continue to be exported, analysis of

segregated streams to confirm that the recyclate is of higher quality and therefore higher

value may provide an opening for laboratory services.

229 Press Statement, Irish Waste Management Association, June 2006. 230

www.simi.ie 231 National Waste Report (2006), Environmental Protection Agency, Table 6, 2007.

http://www.simi.ie/


148

The implementation of improved segregation of biodegradeable waste will create a new

resource stream, one that will require local processing. Equipment that will effectively

achieve this segregation or will subsequently process the waste will be required.

Decentralised solutions will include contained composting processes (“in-vessel

composters”) that would be applicable to large individual waste producers e.g. food

processers, or closely located groups of smaller producers, e.g. an industrial estate.

Anaerobic digestion of the waste to produce combustible gas will have the dual economic

benefit of avoiding methane emissions and producing energy from, in some instances, a

source that may be classified as renewable. Alternative technologies that generate energy

from waste via pyrolysis or produce a secondary energy carrier, e.g. gasification, are also

emerging to a demonstrated level.

As the key driver in the waste management business is EU legislation, all member states and

not just Ireland are facing the same challenges in seeking to comply with waste treatment,

disposal and recycling targets. Many of the new member states are addressing a significant

infrastructure requirement with the assistance of EU cohesion and structural fund co-

financing. The spending plans of these countries in relation to waste management should be

assessed by Enterprise Ireland with a view to identifying specific new business opportunities

and this market intelligence should be made available to the entire waste sector on the

island. 232 Waste management expertise has been locally developed and is exportable,

though in competition with other Member States with more advanced waste management

systems.

Green procurement is part of the published Market Development Programme for Waste

Resources but has not been implemented. National guidance on green procurement should

be introduced as this will promote the use of new technologies and services.

The following would appear to be areas with future growth potential:

MBT development and operation

Engineered in-vessel composters

Analysis of segregated fractions from MRF or MBT, and compost quality assurance (though

overall a small market)

Niche re-processing of recyclable materials

Outputs from producer responsibility initiatives: for example waste tyres; there is some scope for

vehicle dismantling before compaction and export; but battery processing is unlikely

Small or large scale anaerobic digestion of biodegradeable materials (in conjunction with water

sector study)

Export of waste management expertise: planning, development of infrastructure, tracking

software (pay-by-use, hazardous waste streams)

Development of packaging design expertise that reduces the packaging quantity or facilitates

reuse or material recycling.

232 http://ec.europa.eu/regional_policy/newsroom/pdf/scoreboard17012008.pdf

http://ec.europa.eu/regional_policy/newsroom/pdf/scoreboard17012008.pdf


149

The UK’s market for waste management was £8.1bn in 2005 and is forecast to grow to

£15.9bn by 2015. WRAP put the figure higher at up to £30bn by 2020.


The key messages arising from this research are:

The problems inhibiting the growth of the waste management sector in Ireland are well

documented.

Lack of a clear government policy and robust implementation of waste regulations are

barriers. In particular, the dual role of local authorities in the area of waste management

needs to be settled.

The waste industry has expanded rapidly with little recourse to State financial supports.

The waste management sector is well-organised as a network in Ireland, but less so in

Northern Ireland.

Infrastructure requirements identified in the National Hazardous Waste Management

Plan, the National Strategy on Biodegradable Waste, and Regional Waste Management

Plans have not been implemented.

An all-island waste management strategy has the potential to provide economies of

scale in relation to some waste streams.

The waste sector has great potential in terms of exporting services to other member states

who, like Ireland, are struggling to comply with ever stricter EU regulations and targets.

Industry sources forecast that the Irish waste management market could double in size

within five years.

The waste management sector has been the subject of many studies and assessments.

Despite the depth of analysis, key policy recommendations that could generate new

business opportunities have yet to be adopted. There a large consensus among the

companies operating in the sector - a view that has persisted for many years - that there is

an urgent need for a national waste regulator with a remit to centralise decision-making in

relation to waste management policy and waste infrastructure investments. The view of the

sector is that, at the very least, a co-ordination of existing separate structures/institutions to

encourage regulatory and market certainty and ensure implementation that meets national

policy objectives would be welcome.

As scale is critical in the waste management business, the State Agencies should actively

partner and support companies who acquire capacity by way of mergers and acquisitions.

WRAP advises waste companies in Northern Ireland and does so very successfully.233 There is

a need for a similar organisation in Ireland. 233 Further information at WRAP is available at www.wrap.org.uk


150

The sector does not appear to need direct financial assistance from State agencies in its

operation of the waste management system, per se, but financial support for R&D, market

development and commercialisation, along the lines of that provided by WRAP, is desirable.

At the stakeholder consultation meeting, a strong demand for information and advice about

compliance with waste legislation and enhanced awareness raising was articulated.

If key investment decisions were implemented - and the Strategic Infrastructure Act, 2006

will certainly assist in this regard – this will unlock private sector investment and expertise.

Once the problems of the island’s waste market are resolved, problems which occupy much

of the attention of companies in this sector, then the significant know how of these

companies can be deployed to search for export opportunities.

If some local authorities were not so dependent on the revenues they receive from waste

charges it is probable that the entire waste collection business would be outsourced.

The findings of the international review on waste policy are likely to have a significant

influence on government waste policy, on the choice of technology and on the optimum

organisational structures required. Assuming that the findings of this review are acted on

promptly, then Ireland should have a clear waste management strategy from 2009. A robust

regulatory framework will unlock significant potential investment if the market believes the

right strategic choices are made.

If an all-island approach to growing this sector is to be taken, it will be essential that waste

management is seen more as a business opportunity than a sector that should be strictly

regulated.

4.13. Water Supply and Waste Water Treatment

Products, systems or services for the management of the fresh water environment, provision,

treatment, distribution and storage of clean water and wastewater for industrial and

domestic users. Examples of environmental goods and services include resource

development, demand management, manufacture of wastewater treatment equipment,

design, construction, installation and operation of water and wastewater treatment

facilities.


While approaches to water service provision and regulation differ across the world, all

customers want an efficiently run service that seeks to minimise price increases and provide

good levels of customer service. 234 The scale of the sector and its ownership is also an issue.

234 International Comparison of Water and Sewerage Services, 2007 Report, Ofwat UK. This report provides


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For example, the water industry in England and Wales consists of 23 fully privatised

companies, with ten providing both water and sewerage services and 13 providing water

only. In contrast, the water industry in Northern Ireland is not privatised but is run managed

by one agency, NI Water. Outside the UK, ownership and operation is normally organised in

the form of a public utility, either as part of a municipal organisation or a publicly owned

company. On average across the developed world, water companies supply between

142,000 and 420,000 properties. However, in England and Wales the figure is much higher

with medium sized companies servicing up to 1.7m properties. In Ireland in contrast, local

authorities are responsible for water and waste water treatment as the procurer with the

private sector as supplier.

4.13.2. Ireland

Water supply and wastewater treatment are two vital components of Ireland’s national

infrastructure, essential for human health and well-being. Water is required for many

industrial and service activities and is a prerequisite to the efficient functioning of the

economy while wastewater treatment is essential for environmental sustainability and to

protect public health. 235 The water supply sector is predominantly divided into the potable

water supply required by one-off housing throughout Ireland or RWSS (Regional Water

Supply Schemes) approved at a central level via the D/EHLG and Northern Ireland Water

(NIW). A similar situation pertains for the collection and treatment of wastewater locally

(on-site treatment or in group schemes) or collectively (in municipal wastewater treatment

plants). There are approximately 2,700 industrial wastewater treatment plants in Ireland

(700 IPPC licensed activities by EPA and 2,000 licensed by Local Authorities under the Water

Pollution Act). The local authorities may provide this service themselves or procure this

from the private sector. €3.7 billion was invested in new and upgraded water services

infrastructure under NDP 2000-2006. Some €4.7 billion, an increase of 27%, has been

provided under NDP 2007-2013.236

There have been 500,000 new house completions in Ireland since 1999. Wastewater

treatment capacity has been put in place since 2000 to treat a population equivalent of 3.1

million. This has resulted in a reduction in the pollutant load discharged into rivers, lakes and

seas from our cities and towns by 45,000 tonnes per annum. During the same period, water

treatment capacity has also been increased (by an amount sufficient to meet the needs of a

population equivalent of 666,000 people) and now becomes the main focus for the current

NDP. 237

4.13.3. Northern Ireland

comparisons of the financial performance of water and sewage companies. 235 Overview of the Main Infrastructure Issues for Enterprise, Forfas, 2007. 236

http://historical-debates.oireachtas.ie/D/0635/D.0635.200704050437.html

237 The Provision and Quality of Drinking Water in Ireland, 2007. The EPA’s first report on the provision and quality of drinking water in Ireland sets out the issues for the sector, including the need for greater enforcement activity.

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The water industry in Northern Ireland has been the subject of a major (recent) review.238

In Northern Ireland, the Investment Strategy for Northern Ireland has set out the investment

in the water and waste water sector to the year 2017/18, and these are set out below: 239

Table 4.12: Waste and waste water infrastructure investment in Northern Ireland

2008 – 2011

£m

2011/2012 – 2017/18

£m

Total

£m

Water & Waste Water

646.5 (£391.9 add)

£717 (£780 add)

£2.5 bn

4.13.4. The Water and Waste Water Treatment Sector

The sector falls into three categories:

- Mechanical/electrical/civil contractors

- Consultants/engineers/architects

- Local authorities/private industry

There are approximately 270 companies involved in the water and wastewater sector in

Ireland. 240 241 In addition, local authorities are active players in this sector. The market in

Ireland has previously been estimated (for 2004) as €622m (€445m for wastewater

treatment and €177m for water supply). 242 The Water Services Investment Programme

(WSIP) 2007-2009 is made up of 955 projects that have an overall capital value of €5.8

billion.243 Some 30 of the 158 agglomerations (greater than 500 population equivalent)

requiring secondary treatment by the 31 December 2005 did not have the required level of

treatment in place by the end of 2005.244 There are presently at least 64 supplies that have

inadequate treatment (i.e. supplies which originate from surface water and have no

treatment other than chlorination) and need to be upgraded or replaced. In total, the EPA

has identified 339 supplies that require profiling to ensure that the supply is providing clean

and wholesome drinking water.245

238 Independent Water review Panel, Strand One Report: Costs and Funding, October 2007. 239 Investment Strategy for Northern Ireland. Northern Ireland Executive, 2007. 240 The only published statistics relate to NACE 41 which covers the Collection, Purification and Distribution of water. Figures from the CSO Census of Industrial Production indicate that in 2006, the number of local units was 64, there were 2,449 persons engaged in the sector and the gross output of the sector was valued at €168 million. 241 KOMPASS lists 245 companies involved in water products and services provision (excluding local authorities). 26 companies are listed as being providers of effluent services. 242 DG ENVIR Environment Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU Final report, August 2006. 243 http://www.environ.ie/en/Environment/Water/WaterServices/WaterServicesInvestmentProgramme 244 EPA, Urban Waste Water Discharges in Ireland, A report for the Years 2004 and 2005. 245 EPA Report, The Provision and Quality of Drinking Water in Ireland - A Report for the Years 2006-2007.

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The single house and cluster market for wastewater treatment plants is worth €80m per

annum, with unsewered on-site wastewater treatment systems accounting for €52m of the

total. Bord na Mona Environmental, EPS Bison, BNM, Envirocare, and Klargester are the

main players having a 50% market share. The remaining 50% of the market is shared by

some 30 companies. While there has been a slump in the housing market this market is

constant. Increasing concerns about the performance of existing treatment systems indicate

there will be a market for retrofitting of superior technology. There has been increased

business in the commercial sector due to increased regulation of leisure centres, nursing

homes, hotels and schools.

The water treatment market (local authorities) includes clarification, filtration and

disinfection equipment. The wastewater treatment market includes pre-treatment, primary,

secondary, tertiary (advanced) and sludge treatment equipment. This equipment treatment

market is estimated to be worth €170m (2000, with an annual growth rate of 6.8% over

2005. Double digit growth is forecast over the next five years, reaching a size of some €307m

by 2013.246

The key activities of the water supply sector and of the wastewater treatment sector have

previously been identified as follows: 6

Water supply Waste water treatment

Water catch systems and collection Waste water collection

Water purification Sewage and refuse disposal

(Water desalinization) Sanitation

Water transport & distribution Construction

Construction Services

Services

Investment is focused on delivering traditional solutions, particularly in the wastewater

sector. Current issues of microbiological contamination (Chryptosporidium and E. Coli) in

some water supplies is focusing attention in the water sector to look at new technologies

such as membrane filtration and UV treatment, where conventional solutions have not

worked. There are currently only two membrane filtration plants on a large scale in Ireland,

a temporary plant in Ennis where there are continuing water quality issues and an

ultrafiltration plant in Lough Nagharaman, Co. Monaghan where the Donaghmoyne Group

Water Scheme supplies the needs of 1,700 domestic, commercial, industrial and agricultural

customers.

Observed recent trends include:

Decreasing price for water and waste water equipment

Consolidation of water and wastewater equipment companies with multinationals

acquiring Irish companies

Few green field projects, with expansion and improvement of current facilities the main

246 Report by Frost and Sullivan, 2007.


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priority

Tangible shift towards small and medium agglomerations as well as rural communities

Increasing population and the service land initiative providing new opportunities. 247

Research & Development EPA funded research in environmental technologies and cleaner production has supported work in novel wastewater treatment technologies at NUI Galway including: High-Rate Anaerobic Digestion as a Core Technology for Sustainable Treatment of Municipal and Low-Strength Industrial Wastewaters Nitrogen Removal from Slaughterhouse Wastewater by Means of Simultaneous Nitrification and Denitrification (SND) in Modified Sequencing Batch Biofilm Reactor Systems (SBBR)

4.13.5. Key Players

Construction is the most significant activity for both wastewater treatment and water

supply. Key companies in the sector include:

Design, Build Operate, DBO

Companies

Celtic Anglian.

Response Engineering

Veolia Water

EPS

Treatment Systems Ltd.

Earth Tech

Treatment Plant

Manufacturing and Design &

Treatment Technologies

Bord na Mona Environmental

EPS Pumping & Treatment

Systems Ltd.

Treatment Systems Ltd.

Butler Manufacturing Services

Ltd.

Biocycle

Westfalia Separator

Norit

Solids Technology

Whitewater

Carl Stuart

Water Technology

Gilroy Group

Balmoral Tanks

FM Environmental

John Molloy Engineering

Klargester Environmental

Envirocare

Bowen Water Technology

Elga Process Water

Williams

Chemicals and Technical

Solution Suppliers

Acorn Water

Enva

Chemifloc

Nalco

Betz

Ashland

Crossmill

Euthenics

Lennox Laboratory Supplies

Alkem Chemicals

Consultancies Control Mechanical

247 Op cit Frost and Sullivan.


155

Mott McDonald Pettit

Fehily Timoney

White Young Green

RPS

Nicholas O’Dwyer

TJ O’Connor

Honeywell

Siemens

GE

ABB

Waste Water Controls

Amagruss Sensors

ABS Pumps

Hall Pyke Engineering

Fay Environmental

Puro Tech

EPS

Gerry McCluskey Eng.

Globally the French companies Veolia and Suez and the German energy conglomerate RWE

dominate. Other global players include Bechtel, BiWater plc and Saur. 248

4.13.6. Drivers

The EU Water Framework Directive (WFD) is a key driver as it requires the quality of all

waters to be protected and improvements to be made, where necessary, to achieve at least

‘‘good status’’ by 2015. Major legislative revisions have been provided for in the Water

Services Act 2007 which incorporates a comprehensive review, update and consolidation of

all existing water services legislation, and facilitates the establishment of a comprehensive

supervisory regime to ensure compliance with specified performance standards. In

summary, the Act includes provision to:

Consolidate water services law into a single modern code, for ease of access and

application,

Introduce a licensing system to regulate the operations of group water services

schemes,

Amend the Environmental Protection Act 1992 to assign responsibility for supervision of

sanitary authority water supplies to the Agency.

Strengthen administrative arrangements for planning the delivery of water services at

national and local level, and

Place duties of care on users of water services in relation to water conservation,

protection of collection and distribution networks, and prevention of risk to public

health and the environment.

More stringent requirements in relation to discharges to waters under the EU Dangerous

Substances Directives will also impact on all sectors whose actions influence water quality.

Ireland’s compliance with the EU Urban Wastewater Treatment Directive improved from

25% to 90% during the NDP 2000-2006 implementation period. This was mainly as a

consequence of providing secondary treatment for the larger town and cities (population

equivalent> 15,000). Ireland is fortunate in that we are on a small island with our major

conurbations on the coast. As a consequence there has not been a requirement to go

beyond secondary treatment save for those plants discharging to sensitive areas and inland

waterways.

Once implemented, the Directive on environmental quality standards for surface waters

248 http://www.citizen.org/cmep/water/general/majorwater/

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156

will require the preparation of river basin management plans, and the subsequent

implementation of the agreed measures. The EPA is expected to introduce stringent

measures to give effect to this Directive. The Directive on Priority Substances, a daughter

Directive to the WFD, will increase the compliance burden; and by definition generate new

business opportunities. Listed heavy metals and organic chemicals must be monitored and

removed, where necessary, to comply with limit values.

The key pieces of legislation in Northern Ireland are the implementing regulations for the EU

Urban Wastewater Directive and the EU Water Framework Directive. The Regulations

require a new, strategic planning process to be established for the purposes of managing,

protecting and improving the quality of water resources. The Department must carry out the

analytical and preparatory work required by regulations and prepare proposals for

environmental objectives and a programme of measures for the river basin district and the

part of each international river basin district falling within Northern Ireland (Regulation 11).

Those objectives will translate the generic environmental objectives of the Directive into

specific objectives which take account of the particular situation in each district.

Drinking water regulations continue to influence water treatment options. There are

currently no limits for the chryptosporidium parameter in Ireland while limits have applied in

Northern Ireland for a number of years.

Infrastructure and technology procurement is another key driver. The current national

investment programmes in Ireland and Northern Ireland present a unique opportunity to

drive sustainable procurement and maximise the options for local technology suppliers

(“technology forcing”) to provide these systems. In the absence of such a decision,

traditional systems, lacking innovation, delivering conventional standards are likely to be

installed with Irish companies acting as agents for overseas technologies. This is a window

of opportunity to provide demonstration sites and develop a knowledge economy – a

window that is narrow in time.

There is near universal metering across Europe, the USA and Australia. High meter

penetration influences the approach that companies may take to certain activities. Water

metering and unit charges have created an opportunity for greywater recovery for use in

non-potable applications such as toilet flushing in schools. Harvesting, treatment and

distribution/storage of greywater are the main markets. Such systems benefit consumers by

avoiding charges for local authority supplied water and benefit local authorities by reducing

supply demands, which in turn avoid collateral leakage losses, treatment chemicals and

energy requirements for purification and distribution.

Climate change may lead to future water shortages. Dublin City is already suffering supply

shortages and is looking at diverting water from the Shannon or desalination as possible

options. Either option will require a major energy commitment either for pumping long

distances or heat energy for distillation or pumping energy for membrane systems.

As already pointed out, the location of Ireland’s major conurbations on the coast has


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facilitated the discharge of treated effluent to sea, relying on the assimilative capacity of the

receiving waters. However, concerns about emissions of micro-organisms and

micropollutants may increase in inland locations. This concern is likely to be addressed in

mainland European locations first, driving the development of technology leading to higher

effluent standards. Ireland may continue to use traditional technology, awaiting a revised

Directive, or attempt to pro-actively anticipate this trend.

4.13.7. Weaknesses

Problems with Design, Build and Operate Process: There is concern that specialist water

companies are not maintaining or growing technical competence due to pricing pressures

from the tendering process in DBO plants which is turning what was a service led business

into a commodities one. Feedback from a number of companies is that they cannot

compete with non-specialist suppliers for municipal contracts in the supply of treatment

chemicals. This has been described as an “unfortunate dumbing down” of services and

quality of technical investigation work provided, due to specialist services being offered by

new entrants into the market at cut-price rates. The poor quality of work provided by these

"new entrants" has often reflected the low prices. Unfortunately the low quality of work has

often been accepted by the client, as the over-riding consideration is the price rather the

quality of the longer-term service. Experienced staff are required to provide the advice and

direction which the industry requires.

Engineering consultants have also identified the “commodification” of engineering services.

DBO is being promoted by political drivers rather than the needs of the industry. Design has

moved to the DBO contractors, stifling innovation in design and the implementation of new

technologies. The DBO providers offer a completely different viewpoint, however, claiming

that DBO has “raised the bar” in providing unique solutions for each site with innovative

designs that operate as efficiently as possible with minimum power, chemicals and labour

requirements.

Monitoring and enforcement: Failure by water suppliers to continuously monitor basic

parameters such as chlorine (indicator of the effectiveness of disinfection and removal of E.

coli) and turbidity (indicator of effectiveness of the treatment barrier to Cryptosporidium)

puts populations served by those water supplies at risk. Water suppliers should avail of the

contingency fund provided by the Department of Environment, Heritage and Local

Government (Circular L7/07) for the installation of such equipment where funding has not

already been provided for this purpose. Local authorities need the powers and resources to

regulate the installation and on-going performance of water supply and wastewater

treatment systems. In the absence of such enforcement, health risks will continue and there

is little incentive to adopt better quality systems and management practices.

Non-Domestic Water Metering: Charges for water services differ between local authorities,


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depending on the cost of their water and wastewater infrastructure programmes, the cost of

operating their treatment plants and the cost of administering the metering/billing elements

of their programmes. Water services metering for non-domestic users was to be introduced

by all local authorities by the end of 2006 but a number are still outstanding. Fingal County

Council, (as the lead authority on behalf of the four Dublin Local Authorities), awarded the

€40m contract with Gerry McCloskey Engineering Ltd, to supply and install an estimated

42,000 automatic reading water meters on non-domestic connections across the Dublin

region. Installing meters on the non-domestic water connections is in accordance with the

Government’s National Water Pricing Policy Framework to comply with the Water Services

Act. Until the scheme is fully operational, leak detection is difficult and the economic

instrument of paying by use is absent.

Research & Development: There has been relatively little investment in water-related

applied research with the notable exception of limited EPA funding. One of the seven

principal thematic areas under the Environmental Protection Agency (EPA) programme for

Science, Technology, Research and Innovation for the Environment (STRIVE) is Water Quality

and the Aquatic Environment.


EPS (Electrical & Pump Services)

EPS employs over 300 staff between branches in Mallow, Co Cork, Ballyhaunis in Co. Mayo,

Mountrath in Co. Laois and Naas in Co. Kildare. The company also has subsidiary companies EPS

Environmental in Cookstown in Co. Tyrone , JF Andrews in Enniskillen in Co. Fermanagh and AH

Cullen in Naas Co. Kildare. At the time of founding in 1969 the main thrust of investment in the

water and wastewater industry was the provision of group water schemes.

EPS's growth from the mid to late 1970s was rapid. In the 1980s EPS moved into the provision of

regional water and wastewater schemes which provided a new platform to launch the company into

collaborations with major consultancy firms, and on the path to significant local authority contracts.

Throughout the 1990s EPS grew with contracts for everything from industrial wastewater treatment

facilities in dairy, chemical and food industry installations to the acquisition of Aquapure in the UK,

which opened up markets in Cyprus, Bahrain, Libya, Saudi Arabia, Scotland and Wales.

The year 2000 brought EPS into the country's first consortium for a D.B.O. (design, build and

operate) NDP project for Cork's Main Drainage. Four additional partners came on board, three

international expert groups and Hegarty's of Cork. The consortium pre-qualified, tendered and won

the contract for the largest greenfield-site wastewater treatment plant ever constructed in the

British Isles. The project treats the wastewater generated by a population of some 380,000 people.

EPS now also has operations in Drogheda, Dundalk and Limerick. A new division of the company,

EPS Bison, was established in 2002, tapping directly into the potential of Ireland's housing boom;

particularly the rural housing boom and the specific requirements of these rural 'one-off' dwellings

where septic tanks have been traditional.

The Programme for Government, has flagged the introduction of grant aid for the upgrading of all


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septic tanks aged 15 years and over. This marks an opportunity for EPS since it already supplies a

product called the Aquamax, specifically designed for retrofitting existing and defective septic tanks.

EU Directives have been the primary driver because a high proportion of Ireland's drinking water is

currently considered to be under potential threat. EPS is the first and only Irish contractor appointed

to the Scottish water investment delivery programme.

EPS and New Technologies:

Twelve membrane bioreactor (MBR) plants installed across Ireland by November 2007.

Two ultrafiltration water treatment plants installed.

Four thermohilic aerobic digesters for sludge treatment producing class A biosolids.

Numerous anaerobic digesters with complete CHP units attached.

Sludge dryer producing pelletised by-product for re-use.

Installation of STED pilot project in Co. Tipperary.

Installation of vacuum sewer system, Co. Tipperary.

New Membrane Bio-reactor Halves the Size of Wastewater Treatment Plants

Standard wastewater treatment today has four stages (see below). Thanks to a new technology, one

step in the treatment can be avoided. Usually, the biological reactor consists of bacterial biota either

suspended in the liquid or fixed on a substrate. An alternative technology named membrane

bioreactor combines biota suspended in the liquid and a filtration membrane, thus providing

clarification, aeration and filtration.

Researchers from Granada University in Spain have tested a membrane bioreactor using

ultrafiltration membranes. 249

This solution has been tested and validated in a wastewater treatment

plant which processes wastewater from the dairy industry. Such wastewater is highly polluted and

rich in organic matter.

Compared to standard plants, the size of the biological reactor could be reduced by 40% to 60%. The

quantity of sludge resulting from the treatment was also reduced. Secondary decanting was

completely eliminated. According to the authors, construction of the plant would be less expensive

than that of conventional plants (but see below). Moreover, researchers foresee that the primary

decanting stage may also be suppressed in the future.

249 EU ETAP Programme http://www.ec.europa.eu

http://www.ec.europa.eu/


160

One of the main advantages of this new wastewater treatment process is that a larger flow of water

is treated in a smaller purifier, which reduces the size of the plant. This is especially relevant when

available space is scarce, for example in growing urban areas.

Brightwater Engineering, now part of FLI but formerly owned by Bord na Mona, have installed a

membrane bioreactor wastewater treatment plant in Half Way, Co. Cork. This plant illustrates the

advantage of having a small footprint, with the additional potential advantage of producing an

effluent of higher discharge standard, but arguably at a higher capital and operating cost than

traditional plants.

Vacuum sewers and Septic Tank Effluent Drainage Systems in Tipperary

Some €4m has been allocated to pilot test new types of wastewater collection and treatment

systems in seven villages in Tipperary. “Vacuum sewers and Septic Tank Effluent Drainage Systems

(commonly called STEDS) have proved to be a cost effective alternative to conventional gravity and

pumped sewerage systems in other countries and I want them tried here”, according to Dick Roche,

former Minister of Environment, Heritage and Local Government. The STEDS system retains existing

domestic septic tanks on-site but collects the effluent and transfers it through a small diameter PVC

pipe for treatment at a central location250. It is designed to solve some of the more common

problems with septic tanks, including ponding and run-off of effluent with resulting odours and the

risk to local watercourses and groundwaters.

250 http://www.environ.ie/en/Environment/Water/WaterServices/News/MainBody,16121,en.htm

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Supercritical Fluids International

Supercritical Fluids International, a start-up Irish company has recently received investment from

key venture capitalists. The company has purchased the intellectual property rights and pilot plant

for supercritical water oxidation technology from Swedish company, Chematur Engineering. The

aim of the Irish company is to develop, demonstrate and commercialise this technology which

destroys wastewater sludge with a potential energy surplus. It resolves concerns about residual

pathogens and organic micropollutants, reducing the volume of sludge which may, in turn, undergo

iron and phosphorus recovery. The carbon-dioxide formed may be considered renewable is that the

carbon is of biogenic origin and since the oxidation occurs in water there is no need to use energy to

concentrate or dry the sludge for processing. Overall, the process becomes a net energy producer

under suitable conditions and may also be used as a technique to process industrial and commercial

organic waste to energy.

4.13.9. Barriers

The Irish market is small and leads to Irish companies acting as agents for technologies

developed elsewhere. In water treatment the much larger markets in Germany, UK and the

USA are ahead of the Irish market in terms of available technology.

Companies involved in supply of consumables to municipal water and wastewater treatment

plants see the tendering approach to procurement as a bureaucratic one and prefer to

concentrate on the commercial/industrial market where the decision-making process is

quicker and less price sensitive.

Investing in traditional technology is a conservative approach that will not develop

indigenous expertise or anticipate future quality standards. A very high proportion of

Ecogen Energy and Environmental Technologies

Ecogen is an SME based in Northern Ireland, serving a client base throughout the island of Ireland.

Ecogen sells two main types of non-chemical water treatment:

Ionic Water Sterilisation

Magnetic Water Conditioning

The ionic water sterilisation system replaces the need to use chlorine or ozone based water

treatment, reducing costs, environmental impacts (materials and energy use) and health safety

risks associated with the handling and storage of chlorine or ozone. The company has installed

water treatment systems in hospitals, hotels and the food and drink industry. The use of the

technology is claimed to reduce the carbon footprint of water treatment relative to traditional

technologies.


162

planned investment will go into construction costs rather than into knowledge services.

Abstraction of groundwater or surface water without charge offsets the economic driver of

water charges, but may be argued as valid since any treatment is directly undertaken by the

abstractor.

High standards must be specified, monitored and enforced. Such an on-going requirement

will favour more reliable systems with a valuable service element. Because of the dispersed

occurrence of effluent treatment in Ireland, it falls to the Local Authorities to regulate many

small installations. The Local Authorities lack the capabilities to do this, resulting in the

health threats already experienced and not providing the incentive for users to invest in

higher quality systems and services. Stricter regulation and enforcement, to include

performance monitoring and maintenance review is needed.

Small scale goods and consultancy service providers are being squeezed out of the market

by the tendering process for major contracts. Arguably this is delivering better value for

money in the short term and these providers are unlikely to have significant growth

potential, but their demise will reduce the overall national technological competency,

increasing reliance on external providers and restricting the potential for the emergence of

new business. Irish companies may be confined to agents for overseas technologies, lacking

the expertise to enhance a knowledge based economy.


The challenges - therefore the business opportunities - facing Ireland in water and

wastewater treatment include:

Completing outstanding infrastructure projects under the Urban Wastewater Directive;

Inadequate water supply (Dublin Region) and impact of global warming;

meeting water quality regulations;

protecting human health (chryptosporidium and E. coli outbreaks in water supplies)

infrastructure deficit in water supply and wastewater treatment;

meeting increased demand from users;

water leakage;

differential water pricing in local authorities;

Diffuse pollution from agricultural sources, municipal wastewater treatment plant

discharges and septic tanks; and

Implementing the Water Framework Directive’s water quality objectives.

The market opportunities created by the implementation of the Urban Wastewater

Directive are nearing maturity with some niches remaining to be filled such as sludge

treatment and disposal. Wastewater treatment plants effect a reduction in oxidation

demand by biological processes. The ensuing micro-organisms must be periodically

“wasted” (removed), in combination with inorganic materials and other non-degraded


163

substances. The traditional approach to dealing with this “sludge” has been land filling or

land spreading. Some 121,750 tonnes of dried sludge was produced nationally by

wastewater treatment plants in the period 2004-2005. Some 76% of this went to agriculture

and 17% went to landfill. Adoption of the Landfill Directive will prohibit the latter and there

are concerns about the former. Sludge may contain pathogenic micro-organisms, toxic

heavy metals and micropollutants such as endocrine disruptors. Anaerobic treatment or

composting may address some of the microbiological issues but concerns may remain,

requiring careful management and monitoring of landspreading. Incineration or the

emerging technology of supercritical water oxidation will provide more certain destruction.

Intensive agriculture, a spreading of dwellings with an increasing population unmatched by

development in services has threatened Ireland’s water quality. Water supplies have been

contaminated and eutrophication is a concern is some areas. Privately operated (single

dwelling, group schemes) as well as public systems have been found to be inadequate on

occasions. Major public investment in the supply of water and wastewater treatment is

underway, leading to very large new plant as well smaller, local systems. A number of

trends may be identified:

New group schemes are combining smaller entities and replacing others. Higher

operating standards are expected.

There is a tendency to adopt the Design, Build and Operate (DBO) model for

procurement. Design has shifted from engineering consultants acting alone for clients to

DBO contractors that provide the full service.

Domestic sales of water treatment units (UV, ion exchange, membrane filters) are

claimed to be increasing, as well as bottled water sales, as a result of either poor quality

or perception of poor water quality. This demonstrates increasing public concern.

A range of new technologies for water treatment (e.g. Ionic Water Sterilisation) are

available and these are increasingly being adopted for use in the commercial sector,

particularly hotels.

The market for water supply and wastewater treatment systems covers a wide scale, from

one-off housing to cities. There are opportunities to provide integrated packaged systems

across this scale. Such systems can be constructed from supplied components and

integrated in a design, build and operate service, remotely monitored and serviced as

required. They can be engineered to provide high quality potable water or effluent as

relevant, with a small footprint that will address likely future requirements.

The European Commission estimates 40% of water is wasted across the EU. Opportunities

lie in leak detection and repair and water use reduction through metering and monitoring.

Demand side management services will become more attractive as metering and associated

charging is introduced. This will present opportunities for consultancy services, with follow-

on sale of more efficient water using devices.

Many of the existing Group Water Schemes have been operated on a voluntary basis.


164

Clearly, the provision of operating and maintenance services is a future demand.

Remote sensing and control of small water and wastewater treatment plants is consistent

with the previous point. In-situ sensing, telemetry and automation of validated systems will

grow.

Grant aid for the upgrading of all septic tanks aged 15 years and over was promised in the

Programme for Government. Ireland's Domestic Effluent Treatment Association (DETA), an

all-island association whose members include Biocycle, Bord na Mona, Balmoral Tanks, EPS,

FM Environmental, John Molloy Engineering, Klargester Environmental and Envirocare

should be well placed to provide wastewater treatment systems with the required levels of

treatment and durability for single dwellings.

On-going contamination of water supplies by cryptosporidium and e-coli will present

opportunities to provide retrofit final purification equipment.

Provision of individual household water purification treatment units is another growth

market created by contaminated water supplies. In principle, wastewater can be purified to

a quality that allows it to be reused. In the extreme, it can be recovered to potable quality

and better. The availability of water in Ireland is such that this is an unlikely approach for

human potable supply, but the industrial application of such “closed water cycles” is

reasonable where there is a requirement for a substantial quantity of water at less that

potable quality. Application of water unit charges and increases in these charges has

induced some companies to examine such an integrated approach. The feasibility of this will

be driven by an economic balance of the capital and running cost of water recovery versus

the purchase and disposal cost of local authority supplied water.

The EPA water quality research programme is focused in two main areas of research:

eutrophication from agriculture and forestry; and water quality. The former topic has four

main aspects, sources and pathways of nutrient losses, seasonal variation of phosphorus

losses from soil and field management and nitrate leaching from soils. In addition to these

large-scale projects there are a number of medium scale projects on topics such as

ecological assessment of lakes, endocrine disruption in fish and impacts on ground water

with a particular concern regarding eutrophication from agricultural sources. 251 In addition,

the ERTDI Programme 2000 – 2006 has funded a suite of projects specifically to address the

research requirements for the Water Framework Directive in Ireland. The total funding

awarded was of the order of €2 million. One of particular interest is being conducted by NUI

Galway, “Treatment and Monitoring of Nutrients, Odour and Sludge at a Small-town

Demonstration Wastewater Treatment System”. This will examine new technologies,

control, monitoring and developing operational and design guidelines for small-scale

wastewater treatment systems, including tertiary treatment. EI should encourage the

commercialisation of this research.

251

http://www.epa.ie/EnvironmentalResearch/ProjectSearch/WaterQuality/

http://www.epa.ie/EnvironmentalResearch/ProjectSearch/WaterQuality/


165

A programme of new and innovative technologies funded by the Marine Institute and the

EPA is to provide instant alerts on pollution incidents, falling water quality levels and

poisonous plankton blooms in bays, rivers and lakes directly to computer screens in the

country. New approaches to monitoring are being developed at a number of research

institutes across the country. These include advanced remote sensor and monitoring

technology that can be applied to the EU Water Framework Directive. The three projects

being funded under the first phase of this strategic programme are:

SmartCoast: aimed at developing novel sensors to continuously provide water quality

data via wireless links to a web-enabled interface, thereby enhancing the ability of

monitoring and regulatory bodies to achieve compliance with the WFD.

The Cytometry project aims to develop a miniaturised multi-channel system capable of

detecting and counting bacteria and viruses in water. At present, this technique is

limited to laboratory use. The new system will use cell counting coupled with suitable

immunological (antibody) markers and fluorescence markers.

The Optical Sensing project aims to deliver a new highly efficient and innovative

monitoring system based on optical oxygen sensing (and respirometry). The new

biosensor method will provide primary screening of marine samples thus allowing

identification of contaminated, suspicious and life-threatening samples.

Since these technologies can be applied not only in Ireland, but also across the world, this

offers an opportunity for Irish researchers and businesses to play a significant role in what

could be a highly lucrative market, estimated to be worth some €550 million in Western

Europe alone.

Demand side management, through improved efficiency by using non-potable water for

appropriate uses, e.g. rainwater or recycled wastewater, low water use devices domestically

and industrial efficiency will require consultancy services.

Analytical services to confirm on-going quality is another growth area. In addition to off-site

laboratories there is scope for development and application of local sensors with remote

monitoring.

Energy efficiency in the operation of systems will require more efficient equipment e.g.

pumps, blowers, diffusers; more efficient use of equipment e.g. variable speed drives,

management systems, instrumentation and automation; and local energy generation e.g.

biogas fuelled systems, solar or wind powered – even if only for instrumentation.

The following would appear to be specific areas with future growth potential:

Integrated, packaged, compact plants for water supply, wastewater treatment. Such plants

should achieve high quality outputs, requiring the use of “non-conventional” (in Irish terms)

technologies: membrane filtration, membrane bioreactors, sequencing batch reactors, UV


166

disinfection, ozonation exceeding existing Irish standards, anticipating future concerns about

micro-biological and micro-pollutant contamination.

Technologies and processes which reduce the Greenhouse Gas Emissions (GHGs) or Carbon

Footprint associated with water or waste water treatment.

Instrumentation and automation of such plant to support remote monitoring, operation and

management.

Operate contracts for municipal treatment plants provides opportunity for private sector (some

DBO companies now operating to ISO 9001/ISO 14001 and include the DoEHLG PMS system).

In-situ sensing of relevant parameters and laboratory quality assurance services.

Energy efficient equipment, e.g. diffusers and local energy generation e.g. solar powered systems

for instrumentation.

Waste to energy plants e.g. anaerobic digestion, supercritical water oxidation.

All of the above are applicable across a wide range of application sizes, from single dwellings to

conurbations.

Due to the nature of our island status tertiary treatment technology has had limited

implementation in Ireland. However, there is opportunity in European and other markets

where nutrient and microbial removal are more pressing.

As many member states continue to have poor water quality, EI should target those

countries that clearly needed additional investment where Irish companies have the

requisite technologies or expert services. 252 Water and waste water projects are generously

co-financed by the EU Cohesion and European Regional Development Funds.


The market is very competitive at present. The majority of opportunities over the next three

years relate to extension into biological secondary treatment and addition of sludge

treatment. Opportunities in the water segment are limited in numbers with signs of an

acceptance and demand for advanced solutions such as membranes. 253 New

sources/supplies are required for Dublin, currently the subject of a joint RPS/Veolia study.

Upgrades may be required to existing infrastructure including treatment and supply systems.

The National Development Plan and Investment Strategy for Northern Ireland provide an

opportunity to “force” improved technologies, by the creation of a market for goods and

services using green procurement.

Setting high standards for water quality and enforcing these standards will stretch providers

to innovate. Existing and new infrastructure may be considered as pilot and demonstration

sites for better technologies. Since the Local Authorities are often the operators of this

infrastructure, they should be engaged to support this development. With the government

252 The European Commission reports on a regular basis about the implementation of the WFD, COM (20070 128 final, 22 March 2007. See also SEC (2007) 362 dated 22 March 2007. 253 Op cit Frost and Sullivan.


167

as their primary funding source, there is a clear lever to guide them.

A small number of Irish companies already exist which can assemble integrated package

plants in this sector. Research funding should encourage the development of more

sophisticated plants, in particular the introduction of improved automation, sensing and

logging and technologies which will surpass existing Irish quality standards.

In common with other EGS sub-sectors, the water and waste water treatment sector is not

networked to take advantage of market intelligence, legislative change, and emerging

technologies and current and planned R&D effort. Building the capability of the sector to

take advantage of significant future investment in infrastructure on the island and in some

export markets in Europe should be a priority.

The imminent large scale Irish investment in the water sector should be seen as a proving

ground for Irish companies and a stepping stone to export markets.

If Ireland had a single water and waste water authority, it is likely that this would generate

significant economies of scale, for example in terms of bundling projects to attract more

global investors. Typically, they would form JVs with local partners. A single authority might

also attach more priority than is the case at present to the introduction of a wider range of

treatment equipment and technologies. Presently international investors are tendering for

DBO projects in the €20-30m bracket in Ireland. Large-scale projects underway in NI are the

Alpha and Omega projects.

4.14. An Assessment of Strengths, Weaknesses,

Opportunities and Threats

Having reviewed the sub-sectors and taking account of stakeholder feedback and EGS

related research, the Consultants then reviewed the strengths, weaknesses, opportunities

and threats as they relate to the EGS sector. The key conclusions are summarised in the

following table.

Table 4.13: SWOT Analysis of the EGS Sector

Strengths

Opportunities

• Large public sector investment • Government commitment to use fiscal

and other incentives • Commitment to regulatory

enforcement • Open economy facilitates imported

know-how • Access to natural energy sources • Vibrant domestic economy and rising

population • Good project engineering capacity in

• Rapidly growing global market • Potential emerging markets in Eastern

and Central Europe • Business opportunity generated though

public procurement • North/south alignment on

infrastructure investment which could support EGS

• Adjacency to growing GB EGS market • Regulatory compliance • Transition to carbon neutral economy


168

Ireland • Clear government policy in RES and

energy efficiency • All Island energy market • Strong exchequer position • State agency adaptability (strong

experience in FDI) • EPA (absent in NI)

• WRAP and Carbon Trust models could drive innovation

• Benchmarks could offer best practice examples

• Growing environmental awareness in public and business

• Potential synergies between sectors (e.g. ICT and sensors)

Weaknesses

Threats

Low starting base (playing ‘catch up’)

Lack of government policy to support EGS sector

Weak EGS R&D

Poor commercialisation of R&D

Poor knowledge base

Reliance on traditional goods and services

Risk averse public procurement which embeds old technology

Poor spatial planning with diffuse pollution sources

Lack of scale and fragmented market (lack of networks)

Diffuse state support to EGS sector

Lack of investor interest

Lack of standards/verification in EGS sector

Lack of identity for EGS sector

Lack of FDI presence

Difficulties due to two jurisdictions

Low history of innovation in EGS sector

Distance from point of service to markets.

Rising energy and raw material costs

Security of supply of energy and raw materials

Climate change

Cost of not meeting RES targets

Non compliance costs

Lack of government driver

Infrastructural investment

Weak buy in from enterprise sector regarding climate change

Conflicts of interest between regulator and regulated sectors


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4.15. Assessment of enterprise opportunities by sub-

sector

Following this SWOT analysis, an assessment, as follows, was made of the growth prospects

and sectoral capabilities and capacity of the sub-sectors with the highest potential.


Table 4.14: Assessment of Enterprise Opportunities by Sub-Sector Sub-sector Current size of Irish

market254

€million

Growth

Potential -

Island

Current

Sectoral

capability/

capacity

Export

Potential

Main Driver Main Barrier Comment

Construction N/A HIGH LOW HIGH Higher energy

efficiency

standards

Very limited indigenous

capacity to provide required

technologies, processes and

construction products

Distinction between new build and retrofitting.

Unless indigenous manufacture develops,

imports will dominate in the short term. Long

term export potential is high because

improving building energy efficiency will be a

common EU requirement. However this will

require concerted efforts to develop domestic

capacity.

Air Pollution 4-5255 LOW LOW LOW Air quality and

odour regulations.

No demand There may be scope for odour control in waste

water treatment plants.

Clean

Technology

350-700 HIGH MEDIUM/L

OW

MEDIUM/

HIGH

Energy and

material costs

Knowledge and skills deficits This is a cross sectoral category

Consultancy 60 – 75 (island)256

MEDIUM HIGH LOW/MED

IUM

Regulatory

compliance

Fragmentation and ownership

structure

There is a lack of information and support

regarding EGS opportunities; smaller

companies do not have the capacity/inclination

to pursue work abroad

Monitoring N/A MEDIUM MEDIUM/

HIGH

MEDIUM/

HIGH

Water Framework

Directive

Insufficient commercialisation

of research

Dominated by aquatic monitoring; strong

research base apparent

Energy

Management

20 HIGH MEDIUM MEDIUM Energy costs Asset rating emphasis (not

operating performance)

Current demand is low due to poor awareness

but rising energy costs will change this. Irish

companies are operating successfully in UK

market

Marine 3 - 5 (island)257 LOW LOW/MEDI

UM

LOW Regulatory

compliance

Lack of scale

254 no date for NI apart from population pro-rata calculation from DTI report. 255 Industry estimate. 256

Industry estimate 257 Industry estimate


171

Noise N/A LOW LOW LOW Noise Directive Lack of skills

Remediation 46 – 58 (island)258 LOW LOW LOW Risk mitigation Lack of scale EU Soil Directive will shift focus to treat soil as

an asset

RES 600 - 700259

HIGH LOW HIGH EU RES targets Lack of first mover advantage Low capacity relative to competitors; Strong

niche capacity in NI; Wave, tidal have greatest

potential

Waste 1,200 – 1,600260

HIGH MEDIUM LOW Regulatory

compliance

Lack of clear government policy There is greater potential for higher value

recyclables; achieving economies of scale is a

critical success factor; the level of

infrastructural investment committed should

support new environmental technologies

Water >2,000261

HIGH MEDIUM HIGH Regulatory

compliance

Under investment in new

technologies

Very significant commitment in NDP should be

used to leverage capacity to deploy new

technologies

Total 4,280-5,160

258 Industry estimate 259

Consultant’s estimate 260

Industry estimate 261 DEHLG Water Services Investment Programme 2007 – 2009 capital costs only


5. CHAPTER 5: KEY DRIVERS

5.1. Introduction

This chapter considers the main drivers of growth within the EGS sector. As highlighted

elsewhere in the report, and as confirmed by stakeholder feedback, regulatory compliance,

including the compliance burden arising from the implementation of national and EU

legislation, is the key driver. However, with growing concerns about rising energy prices and

the recognition of the urgent need to tackle climate change, new challenges and

opportunities are beginning to emerge as new technology solutions respond to market

stimuli.

A December 2007 survey conducted among a diverse sample of environmental consultants

in the UK and Ireland (>1,000 respondents) gave the following answers to the question of

growth markets.

Which are the most important growth markets for your business? (Consultants answers only)

Private sector work Waste management Public sector work Climate change/CO2 emissions Renewable energy Contaminated land EIA/SEA Water/Wastewater treatment CSR/environmental reporting Hazardous waste Air quality/pollution control IPPC Cleaner production

© 2007 Faversham House Group

The same survey also posed the following questions to EGS customers “what changes do you

expect to need to purchase the following consulting services over the next 1-2 years.


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(Customers answers only)

CSR

ISO 14001

Waste management/recycling

Environmental reporting and verification

Water

Wastewater

Contaminated land

EIA

Climate change

IPPC

Cleaner production

Due dilligence

© 2007 Faversham House Group

The results are broadly symmetrical between the two groups with strong showings in the

area of waste management and, in particular, the many facets of climate change. For

example, the expected growth in environmental reporting has been attributed to the fact

that customers expect the reporting of carbon footprints to become the norm in the coming

years.

On a similar scale, ENDS (Environmental Data Service), a well-established information forum

for the environmental goods and services sector in the UK and Ireland, produce an annual

directory containing, amongst other information, the results of a wide-scale survey of EGS

professionals. The 2008 directory ranks the core issues of environmental managers; the top

three issues reported were:

1. Waste management and recycling

2. Environmental management systems

3. Climate change and carbon management

There is an obvious parallel with the previous results of the Faversham House survey, the

noticeable change over the previous years has been the emergence of climate change as a

key driver in the sector.

Drivers appear to fall into one of two categories:


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Conventional: Compliance with EU environmental legislation, infrastructure investment

aligned to population growth. DG Environment defined these as “Traditional markets

driven by demand for essential commodities (water supply) or services (waste

collection) which are increasingly mature.”

Non-Conventional: New technology, adaptation to climate change or declining

commodities Investment and reporting activity is dominated by climate change and

energy security with the knock-on effect in four of the sub-sectors in the study. By way

of example, Morgan Stanley comment that: “We believe our E4 growth drivers

(emergence, economics, energy security, and environment) will generate significant

investment in clean energy solutions by governments, businesses, and consumers

worldwide.”

Lehman Brothers make the distinction between technology push and market pull schemes

as drivers to the EGS sectors in the future:

Technology push – Development of low emission technologies through publicly-funded

R&D programmes (Japan-Solar, Denmark-Wind).

Market Pull – Technological change coming from business, in response to economic

incentives. This view gives priority to regulatory measures as: Technology-based

regulatory limitation; GHG emission caps; and changes. Profit seeking business will

innovate.

The overall purpose of these drivers is, as set out in the EU Lisbon strategy: “to become the

most resource efficient economy in the world.”262

5.2. Legislation Specific to the EGS Sector

In recent years, the growth in the EGS market has been driven significantly by compliance to

EU Directives and Regulations which will soon cover all major environmental segments.

These EU rules have either superseded existing national legislation or created the

benchmark where none existed previously. These include the following;

IPPC (Integrated Pollution Prevention and Control – 96/61 EC)

EU ETS

SSD (Sewage Sludge Directive – 86/278/EEC)

Air Quality Directive (96/62/EC)

Waste licensing

WFD (Water Framework Directive – 2000/60/EC)

WEEE (Waste Electrical and Electronic Equipment – EC 96/2002)

REACH (Registration Evaluation Authorisation & restriction of Chemical substances – EC

262 Andrea Tilche, DG-Environment, EPA Conference, Dublin, February 2008.


175

1907/2006)

Ecodesign for EuP products – (EU Directive 2005/32/EC)

While these Directives may already be transposed nationally, the final compliance date may

be significantly in the future; for example in the case of the WFD member states have until

December 2015 to achieve, what is termed ‘good water status’. Implemented Directives also

require significant on-going monitoring, control and reporting all forming part of the overall

market. In the context of the all-island nature of this report, the WFD is a good example of

where a Directive is trans-boundary treating Ireland as a single eco-region divided up into a

number of natural river basin districts and the works associated with the evaluation and

management of the RBDs is through a variety of public/private and EU funding partnerships.

Other significant pieces of environmental legislation that will serve to develop the EGS

market further will be the proposed Directive on soil which will put soil on the same

legislative standing as air and water and the noise Directive. The forthcoming EU Action

Plans on Sustainable Industrial Policy and Sustainable Production and Consumption

(Ecodesign for EuP products) will be considered as part of the legislative review. This will be

viewed especially in the context of energy efficiency.

The key Directives which will drive business opportunities are as follows:

Table 5.1: Primary EU Directives that generate business opportunities

• Water Framework Directive (2000/60/EC)

• Sewage Sludge Directive (86/278/EEC)

• Council Directive 1999/31/EC on the landfill of waste

• Waste Framework Directive 2006/12/EC

• Directive 2004/35/EC on environmental liability with regard to the prevention and remedying of

environmental damage

• Waste Shipment Regulations (Regulation No. 259/93)

• Incineration Directive (2000/76/EC)

• Hazardous Waste Directive (91/689/EEC)

• Directive on Air Quality Management and Assessment (Air Framework Directive) (96/62/EC)

• Directive 2001/81/EC on national emission ceilings for certain atmospheric pollutants.

• Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading

within the Community (EU ETS)

• “VOCs” directive (2004/42/EC)

• Ozone Depleting Substances (ODS) Regulations (No. 2037/2000)

• Directive 96/61/EC concerning integrated pollution prevention and control (IPPC)

• REACH (Registration, Evaluation, Authorisation and Restrictions of Chemicals) Regulation 2006

• Ecodesign for Energy using Products Directive (2005/32/EC)

• Directive on energy end-use efficiency and energy services 2006/32/EC

• Regulation (EC) No 1980/2000 on a revised Community eco-label award scheme.

• Waste Electrical and Electronic Equipment (WEEE) EC 96/2002

• Reduction of Hazardous Substances (RoHS) in EEE (202/95/EC)

• End of Life Vehicles Directive (2000/53/EC)

• Directive 2002/49/EC relating to the assessment and management of environmental noise

• Proposed Soil Framework Directive


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• Stimulating Technologies for Sustainable Development: An Environmental Technologies Action

Plan for the European Union COM (2004) 38

The precise impact which these Directives have on the EGS sector and on manufacturing

industry in general were explained in Chapter 4.

It is clear from stakeholder feedback, that even experts in the EGS sector have difficulty in

fully understanding the ramifications of these Directives.

5.3. Infrastructural Investment and Government Policy Targets

Investment in Ireland’s infrastructure has also played a key part in the growth of the EGS

sector in recent years. The new National Development Plan, 2008-2013, claims that it will

make a major contribution to the enhancement and sustainability of our environment

including significant measures to assist the limiting of Ireland’s emission of greenhouse gases

in line with international obligations.

5.3.1. Energy Investment

Over the period 2005-2010, energy demand is projected to increase by 1.6% a year and

this level of increase is expected to be maintained to 2013.

The Energy Programme of the NDP allocates some €8.5 billion in investment in energy

over the period of the Plan; €1.2 billion under the Strategic Energy Infrastructure Sub-

Programme; €276 million under the Sustainable Energy Sub-Programme; and €7 billion

under the State Energy Companies Sub-Programme.

In addition to renewable electricity, the renewable heat and transport sectors, and in

particular the bioenergy sector are now emerging as areas in which there will be

increased policy focus over the lifetime of the new Plan. A target of 15% contribution by

renewable energy to electricity generation by 2010 has been set.

Investment in renewable energy during the 2007-2013 period will focus primarily on the

large-scale deployment of wind, the emerging potential and deployment of biomass and

biofuels, preparatory action on ocean energy and deployment of other technologies

such as solar and geothermal technologies.

Energy efficiency measures aimed at establishing and maintaining an effective market

structure, informing and empowering consumers to make strong energy efficiency

choices. The overall objective of the proposed programme will be the achievement of an

annual saving of at least 1% of energy use across the economy over the lifetime of the

Plan (3% per annum reduction in greenhouse gas emissions; 20% (33% for the public

sector) reduction in energy demand by 2020.)

Increased energy efficiency will mitigate energy demand growth, reduce import

dependence, contribute to carbon reductions and mitigate growth in the energy bill, for

the economy and for the individual.

Integration and innovation measures will focus on integrating sustainable energy


177

practices and structures into public policies and the development of regional and

national infrastructures. There will be two sets of activities: the integration of national

sustainable energy policy measures at a regional and city level, and the smaller-scale

piloting and evaluation of sustainable energy technology options, including those in the

renewable energy, energy efficiency and urban transport areas.

Electricity produced from renewable sources, in particular wind, will increase its

contribution to Ireland’s power needs threefold between now and 2010. At present

there are just over 1,000 MWs of renewable generation on the electricity system.

Eirgrid engaged with ESB Networks in processing offers for a further tranche of some

1,340MW of wind generation capacity. It is anticipated that the vast majority of the new

projects will be operational by 2010.

Bord na Mona’s proposed capital expenditure of €270 million over the period of the NDP

relates to the development of wind farms in Mayo and the Midlands and the

development of a waste management facility, which may include a waste-to-energy

function.

The Energy White Paper claims that Ireland will achieve the EU target of 5.75% biofuels

market penetration by 2010 which will be delivered through the existing mineral oil tax

relief scheme, the planned biofuels obligation on fuel supply companies and the

promotion of biofuels in public fleets. The biofuels obligation on fuel suppliers is

expected to be developed and put to industry and public consultation with the next 12

months. A target of 10% biofuels penetration by 2020 has been set.

In relation to Biomass, the Government is committed to increase area sown by energy

crops from 3,000 to 70,000 hectares. While no details are available about the level of

capital investment required, significant investment will be needed in processing capacity

etc.

White Paper has set an initial ambition of at least 500MW of installed ocean energy

capacity by 2020.

The Energy White Paper claims that at least 400 MW from CHP will be achieved by 2010

through continued support under the CHP Deployment Programme and R&D supports

with particular emphasis on biomass fuelled CHP and will aim to achieve at least 800

MW by 2020.

Within two years further target for CHP will be considered for 2020 in light of further

feasibility studies by SEI into CHP applications and reviews by CER.

Bio Heat: The Energy White Paper claims that Ireland will achieve a minimum target of

5% market penetration of renewables in the heat market by 2010, facilitated through

the expanded Greener Homes and Bioheats grants programmes and have set a target of

12% market penetration by 2020.

5.3.2. Waste Management

Under the Waste Management Sub-Programme, some €753 million will be invested in

dealing with the problem of legacy landfills and in supporting the recycling and recovery

effort.

This will include funding for recycling and recovery services to continue to roll out


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publicly available recycling centres to increase and enhance the availability of high-

quality biological treatment facilities.

In line with national policy on the integrated approach to waste management, thermal

treatment with energy recovery is the preferred option for dealing with residual waste

after achieving ambitious targets in respect of waste prevention, recycling and recovery.

This is reflected in the regional waste management plans for which the local authorities

have statutory responsibility. These waste-to-energy plants will be provided as entirely

private sector developments or by way of public private partnership.

In relation to legacy landfills, there remains a ‘‘legacy’’ issue in relation to waste

management activities before the introduction of the Waste Management Act, 1996.

Municipal waste infrastructure consisted almost entirely of landfills, which were

generally not engineered and operated to standards that would now be considered

acceptable. Further, such landfills were not subject to the type of restoration and

aftercare plans now considered the norm, and remediation activities were often

minimal. Some of these landfills have been brought within the purview of the licensing

process but quite a number closed before the licensing regime mandated under the

Waste Framework Directive took effect.

5.3.3. Water Programme

It is intended to build on the progress made under the NDP 2000-2006 by investing

€4.75 billion under the Water Services Sub-Programme in upgrading and expanding

water and wastewater treatment capacity to meet the needs of a growing population

and expanding economy, improving drinking water quality to meet National and EU

drinking water standards, treating wastewater to achieve the highest level of

environmental protection and compliance with national and EU requirements.

5.4. Infrastructure Investment in Northern Ireland

Construction and infrastructure development for the period 2008-2017/18 are set out in the

Investment Strategy for Northern Ireland 2008-2018.263 The Strategy sets out 6 Pillars and

23 sub-pillars and identifies the investment required for each. The Strategy describes the

objectives of investing in infrastructure as:

a) Economic – investment in infrastructure to help grow a dynamic and innovative

economy, and help to deliver modern high quality and efficient public services

b) Societal – investment in infrastructure to help promote tolerance, inclusion, equality of

opportunity and the desirability of good relations, promote regional balance in future

development, and tackle areas of social disadvantage

c) Environmental – investment in infrastructure to help protect and enhance our

environment and natural resources.

263 Investment Strategy for Northern Ireland 2008-2018. Northern Ireland Executive. 2007.


179

Table 5.2: Infrastructure Investment in Northern Ireland Pillar and Sub-Pillar 2008 - 2011 2011/2012 –

2017/18 Total

Networks 861.1 2774 4035

Roads 611 2083 (400 add) 3095

Public Transport 195 530 725

Gateways 5.6 6

Telecoms 28.7 7 35

Energy 19.7 154 174

Skills 891.1 3265 4156

Schools 718 2792 3510

FE & HE 141.5 366 507

Libraries 31.6 107 139

Health 728.5 2575 (355 add) 3659

Primary Care 152.6 354 (355 add) 862

Public Safety & Technology 163.8 408 572

Hospitals Modernisation 412.1 1813 2225 Social 1623.9 1413 3037

Regeneration 426.7 203 630

Housing 924.9 892 1817

Welfare Reform 71.2 71

Culture, Arts, Sport 201.1 318 519

Environment 881.2 (450.5 add) 830 (957 add) 3118

Water & Waste Water 646.5 (391.9 add) 717 (780 add) 2535

Waste Management 197 (58.6 add) 3 (177 add) 436

Flood Risk Management 23.2 59 82

Environment 14.5 51 65

Productive 496.9 825 1322

Enterprise & Innovation 192.9 477 670

Tourism 72 19 91

Rural & Primary Industries 172.1 240 412

Public Sector Reform 59.9 89 149

Other & Misc 6.8 10 17

Total 5489.5 (add 450.5) 11692 (add 1712) 19344

The Strategy has placed sustainability at the centre of infrastructure development and

delivery in Northern Ireland, stating: ‘We will build sustainability into each infrastructure

project as comprehensively as possible’

While the Investment Strategy for Northern Ireland sets out the economic/financial basis for

the development of Northern Ireland infrastructure needs for the next 10 years, no attempt

has been made to account for the resource consumption and greenhouse gas emissions

associated with this infrastructure.

This presents a huge opportunity to build a robust evidence base for sustainable

infrastructure development on the island of Ireland by measuring the resource flows and

GHG emissions associated with this infrastructure and using this evidence to develop policies

and programmes which ensure that the infrastructure is delivered sustainably.

A number of studies in the UK have assessed the resource consumption (material and

water), waste and carbon emissions associated with both new housing programmes and


180

delivering improvements to existing housing stock264 265 and the opportunity exists to assess

the sustainability of the housing and infrastructure projections for Ireland.

The key to achieving this aim will be sustainable procurement and at a UK level, the

Sustainable Procurement Task Force has been established in to produce an Action Plan to

deliver on the goal set out in the Governments 2005 Sustainable Development Strategy to

make the UK a leader in the EU in sustainable procurement by 2009.266

The Task Force published its Action Plan in 2006,267 which identified 18 Public Sector Spend

Priorities, in terms of influence, scope and risk, and are:

a) Construction (building and refit, highways and local roads, operations and maintenance)

b) Health and Social Work (operating costs of hospitals, care homes, social care provision)

c) Food

d) Uniforms, clothing and other textiles

e) Waste

f) Pulp, paper and printing

g) Energy

h) Consumables – office machinery and computers

i) Furniture

j) Transport (business travel, motor vehicles)

Given that the public sector in Northern Ireland is a much larger percentage of the economy

than at a national level, the importance of public sector procurement in driving sustainability

and the development of the EGS Sector is of even more vital importance. The integration of

a Sustainable Procurement National Action Plan for Northern Ireland or the island of Ireland

into the delivery of the Investment Strategy for Northern Ireland probably has more

potential to influence the development of the EGS Sector more than any other single action.

5.5. Climate Change and Energy Efficiency

While regulation has been the most important driver of growth within the EGS sector in the

past, in coming years, growing concern about climate change and rising energy costs are

expected to take centre stage. As highlighted in a recent UK Government report, the

transition to a low-carbon, resource efficient economy will see the emergence of new

technologies and innovations that will stimulate new business models, products and services,

transform existing sectors of the economy and create entirely new industries.268

264

Stock Take. Sustainable Development Commission. July 2006. 265

Better Buildings - Better Lives: Sustainable Buildings Task Group Report. Sustainable Buildings Task Group. 2004. 266 Securing the Future - UK Government sustainable development strategy. March 2005. 267

Procuring the Future. Sustainable Procurement National Action Plan: Recommendations from the Sustainable Procurement Task Force. 268

UK Commission on Environmental Markets and Economic Performance (BERR/DEFRA Report, November 2007).


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The threat of global climate change and the urgent need to reduce emissions is

fundamentally changing the nature of environmental markets.

A recent estimate puts the current market for new low-carbon energy technologies at

around $100 billion per year. This already large emerging market could become huge if there

is concerted international effort to address climate change. For example, the Stern report

estimated that it would be worth at least $500 billion per year by 2050, while others suggest

that the overall added value in the low carbon energy industry could be as high as $3 trillion

per year worldwide by this time;269 and could employ more than 25 million people.

But according to the CEMEP report, this still underestimates the size of the opportunities.

“Low-carbon and cleaner technologies are beginning to be embedded in process and product

development as mainstream businesses make explicit commitments to deliver products and

services with lower environmental impacts. Attention is being paid to improving resource

productivity, which can reduce the carbon embedded in products as well as the unsustainable

consumption of natural resources. This in turn is having impacts throughout the supply

chains and increasing consumer and employee awareness” 270

5.6. Ethical Consumption, Investment and Corporate Social

Responsibility

More and more, it is clear that firms are being judged not just in terms of their financial

performance but also in terms of their social and environmental responsibilities as well – the

so called “triple bottom line”.

Reporting of CSR activities has come a long way in recent years. In the past, approaches to

CSR reporting have been extremely varied. Many companies were accused of producing

glossy PR brochures – with little or no real substance. However, now there is far more focus

on the CSR report as an expression of a company’s core values and on how these translate

into all areas of the company’s business.

Another notable development has been the growth in independent verification or audit of

CSR reports to ensure enhanced scrutiny, greater transparency and accountability to

stakeholders. Indeed, a new CSR standard, ISO 26000 on Social Responsibility, has been

being developed, covering core areas of environment as well as human rights and labour

practices etc.

269 Calculation by Professor Dennis Anderson, Imperial College London, based on the estimate that, by 2050, 70 % of expenditure that would have been directed to fossil fuels in the absence of carbon abatement will be directed to low carbon technologies. Using the expected value of world product by 2050 and the proportion of world product currently represented by fossil fuels gives a figure of $3 trillion. Such estimates are, of course, approximate, but provide a good indication of the likely size of the market for low carbon technologies. 270 ibid


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For larger multinational organisations, initiatives such as Global Reporting Framework have

also been important developments (and indeed a number of Irish companies also use this

framework). In addition, the growth of ethical investment funds and indices which track the

relative ethical or environmental performance of companies has also added to the pressure

to not only report but to open the business up to external scrutiny (e.g. Dow Jones

Sustainable Index, FTSE4Good etc.).

The UK CEMEP report, for example, highlighted figures from the UK Investment

Management Association which showed that UK investors have dramatically increased the

amount of money they are putting into ethical funds. Indeed, net sales of UK ethical funds

in the first six months of 2007 of £237.5 million were already double the £136.6 billion of

sales made in 2006. Pure ethical funds now make up 1.4% of total fund sales in the UK.

It would also appear that a growing number of investors agree that integrating economic,

environmental and social success factors into business strategy can result in competitive

advantage, particularly in the long term. In 1999, for example, the Dow Jones Sustainability

Index (DJSI) began tracking the performance of the leading sustainability-driven companies

worldwide; it has consistently outperformed the Dow Jones Global Index.271

It would seem, therefore, that business is ready to invest in the environment as never

before. Driven by political developments, increased public consciousness and the

emergence of consumer demand for environmentally responsible products and services,

environmental concerns seem certain to have a far greater impact on business strategy and

operations in coming years.

5.7. RD&D

Supply ‘push’ includes support for research, development and demonstration (RD&D).

Targeted support will leverage private sector investment into the technologies required to

meet future environmental objectives.

Market failures resulting in under-investment in RD&D are well proven. Long lead times and

the high cost of technology development are significant factors in many EGS sub-sectors.

The displacement of incumbent low-cost technologies is another factor. Despite R&D

funding for eco-innovation, R&D alone will not bring new technologies to the market.

Therefore this justifies targeted support to help leverage private sector investment into

technologies required to meet future environmental and energy policy objectives.

The Strategy for Science, Technology and Innovation set out the future strategy for RD&D in

the EGS sector. However, there is no detailed Master Plan along the lines of what exists in

Austria. The level of ambition and vision for the development of eco-innovation is nowhere

near that of comparator economies. Furthermore the resources allocated to environmental

R&D through the NDP could be higher. Approximately €90 million is available in Ireland to

271 Report of the Commission on Environmental Markets and Economic Performance.


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support environmental R&D activity through the ERTDI/STRIVE EPA Programme between

2007 and 2013. The percentage of this that will be allocated to environmental technologies

(EGS) is not known (it is one of the three key measures). Therefore while there are notable

exemplars - the Tyindall Institute for example - EGS-related and applied research should be

given a greater priority than is presently the case. 272While there are strong institutional links

between public agencies involved in EGS-related R&D by comparison to other member

states, in general the coordination of the support for EGS could be better coordinated and

less diffuse.

5.8. Public ‘Green’ Procurement

State contracting authorities have a very large purchasing power accounting for up to 16% of

GDP (€25.8 billion in the case of Ireland). 273 In particular, extensive levels of construction

work are carried out by or on behalf of public agencies and local authorities, involving huge

volumes of goods and services. Energy, water and other material consumption is also at a

high level and the technologies involved in this sector use large volumes of oil.

State agencies are currently not leading the way by providing sufficient exemplary behaviour

in the promotion of EGS goods and services.. Under the National Energy Efficiency Action

Plan, the public sector is expected to play a leadership role by achieving a 33% reduction in

energy demand by 2020 (a target of 20% is set for the entire economy).274 The

environmental record of government offices and agencies, schools, universities, health

boards, local authorities etc. can be significantly improved. It is vital that these agencies are

seen to be acting responsibly, rather than just preaching good practice to the general public

and business. In order for people to trust the information and advice they are getting from

contracting authorities, these organisations must be seen to be implementing best

environmental practice.

The percentage of Irish green public procurement (GPP) was about 5% compared with an EU

average of 19% and compared with 50% for Sweden. 275. In another more recent study,

Ireland did not rate much better. 276 As part of their commitment to GPP, all Member States

have agreed to develop National Action Plans for implementation. In Ireland it is planned to

reach the levels of the so-called ‘Green 7 countries’ (Austria, Denmark, Finland, Germany,

Netherlands, Sweden and UK) that “appear to have consistently more tenders with green

criteria than the ‘Other-18’”. 277 Ten Members States have completed and published their

plans, and work on the Irish NAP has begun but it is not complete.278

272

http://www.tyndall.ie/ 273 http://ec.europa.eu/environment/gpp/index.htm 274

National Energy Efficiency Action Plan for Ireland 2007 – 2020, Dept of Communications, Energy and natural Resources, 2007. 275

ICLEI European Secretariat, Eco-Procurement Programme Survey on the state of play of green public procurement in the EU - Final Report Freiburg, July 2003. 276 Virage et alia Green Public Procurement in Europe 2006 Conclusions and recommendations (Take 5 Report) EU, 2006. 277 ibid. 278

Details of national action plans from other countries can be seen at http://ec.europa.eu/environment/gpp/national_gpp_strategies_en.htm



http://ec.europa.eu/environment/gpp/index.htm

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Public procurement - as has been demonstrated in Austria and in the UK - provides an

opportunity for ‘market pull’ i.e. it can facilitate the commercial viability of an innovative

good or service and help to attract investment as a consequence. For example, an Irish

enterprise would have a better prospect of getting a foothold in the $150 billion market for

energy-efficient lighting (2020 forecast) if Irish contracting authorities indicated that they

would begin specifying new lighting standards from 2010 for instance thereby giving Irish

companies and potential joint venture partners an opportunity to collaborate on delivering a

new innovative product.

New EGS goods and services will also emerge provided the contracting authorities set high

RES-E or EGS standards in their purchasing requirements. For example, a single standard

could be set by local authorities for all building materials required to be used in the

construction of new buildings to meet BER A1 standards. This would drive investment in

such goods which will otherwise be imported. Requiring that works contracts should reflect

best practice in respect of sustainability would send an important signal to contractors and

encourage the delivery of new value added services.

There is also the issue of scale. Many global players do not take an interest in the Irish

market because the size of public works contracts is generally too small. If Ireland wants to

attract these investors - and their know-how and technology - serious consideration needs

to be given to the bundling of projects at a scale that might make it attractive to overseas

companies. For example, there is no reason why the construction of BDO water and waste

water treatment facilities should not be bundled into one multi-annual contact at regional

level. While in the short term this would be unpopular with Irish contractors, what will be

achieved is that overseas bidders will use Irish partners thereby transferring their know-how

and engineering skills and technologies. This is turn will have a multiplier effect within the

EGS sector. However Irish contractors could also benefit. One good example of this is the

Irish firm CES Energy (Marenn Engineering) who is active in retrofitting buildings with energy

systems, and providing renewable energy solutions. The turnover of this company has gone

from €15 million in Australia to €150 million in one year, the driver being that all Australian

public buildings have to be energy efficient and reliant on renewables, hence require

retrofitting. If Ireland committed to such a large retrofit programme, markets would also

open up here – for Irish as well as overseas providers.

One of the main barriers to green public procurement in public bodies and local authorities

is the lack of integration among different departments especially in large organisations. 279

This is also true of the private sector. A major benefit of green procurement is that it

involves all departments in an organisation and affects all their purchasing policies. It is most

important that environmental issues are thus integrated, at all levels in an organisation, both

horizontally and vertically. The finance department is especially important since so many

decisions and issues critical to the environment are taken by finance departments, both in

279

Coakley, Tadhg et al. Investigation into why existing environmental technologies are underused in Ireland. EPA, 2007


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the private and public sector.

Another barrier to GPP is the common misperception that it is in breach of procurement

legislation to give preference to products or services ‘just’ because they are environmental

in nature. Some procurement professionals believe that it is necessary to select tender bids

primarily on economic grounds only. It is also difficult for those involved in public

procurement to draw up tender specifications with an environmental element as they often

do not have the knowledge to environmentally assess technologies or services. However,

despite these difficulties, as stated above, GPP is being widely practiced in some Member

States and its benefits are substantial. 280

One of the issues to be explored by the EGS sub-sector networks is the encouragement of

joint bidding for EU-wide EGS-related contracts. In this regard EI and InterTrade Ireland

could provide advance market intelligence (based on PIN notices) to alert bid consortiums to

pending business opportunities.

5.9. Conclusions

The key messages are:

• EU environmental policy frameworks (e.g. Integrated Product Policy including REACH, WEEE,

RoHS, Energy use Products Directives and Regulations) and compliance with environmental

legislation is a key driver. Regulation has driven growth in most sectors in the Irish market. Early

adoption of legislation can create an advantage over other EU Member States. Strong

enforcement and consistent application across different local authorities is a key requirement.

Ireland can also go beyond EU Directive requirements to gain first mover advantage (e.g. plastic

bags, smoking ban, light bulb ban etc.)

• Having a clear policy with long-term supports (targets, tariffs etc.) creates the stable framework

for growth and development. Current uncertainties in waste policy, for example, must be

eliminated.

• Research and development is fundamental in the identification and widespread application of

new/improved technologies. R&D should not only focus on new, innovative technology

development but innovative ways to ensure greater uptake.

• Rising energy costs is encouraging companies to consider energy efficiency and is creating an

explosion of opportunity in the RES sector.

• The public sector can lead by example through implementation of green procurement and

specifying environmental criteria in public tenders. This can hugely increase the market for EGS,

given the massive spending commitments in the National Development Plan and the spin offs

through the whole product chain can be exponential.

• Companies need support through the development phase of long lead-in technologies to ensure

success which leads to long-term growth. Economic and information based supports need to be

280

Several countries and organisations offer detailed guidelines on green procurement and criteria – these can be seen at http://ec.europa.eu/environment/gpp/guideline_en.htm

http://ec.europa.eu/environment/gpp/guideline_en.htm


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greatly intensified and more focused on EGS. There needs to be a greater coordination of agency

support.

The main drivers identified are: • Regulatory compliance • Rising energy and raw material costs • Security of supply of energy and raw materials • Climate change • RES targets • Infrastructural investment • R&D • Public ‘green’ procurement


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6. CHAPTER 6: INTERNATIONAL BENCHMARKS

6.1. Introduction

This chapter examines the EGS sector in the United States and Austria and reviews the

proposed strategic framework conditions for the EGS sector in the UK.

The US was selected as the level of investment in its EGS sector is expanding rapidly due to a

heightened awareness about the environment and more recently in response to Federal and

State initiatives in the area of climate change. In addition, the US is a key prospect for IDA

Ireland and Invest Northern Ireland.

Austria was selected because of the high strategic importance attached by its government to

the development of the EGS sector, in particular with the publication of a ten-year Master

Plan for the development of environmental technologies.

In addition, consideration has also been given to the approach adopted by the UK

Government to setting strategic framework conditions aimed at the further development of

the EGS sector. This is apposite not least as this strategic policy framework applies in

Northern Ireland some elements may be worth considering on an all-island basis.

Finally, the European Commission’s Lead Market Initiative is examined briefly as it applies to

three of the sub-sectors covered in this report.

Company benchmarks were included in the Chapter 4 on the sub-sectors where these

illustrated specific cases of best practice.

6.2. The United States of America

The US EGS market, or more generally the ‘environmental technology’ market is defined by

those environmental technologies that “advance sustainable development by reducing risk,

enhancing cost-effectiveness, improving process efficiency, and creating products and

processes that are environmentally beneficial or benign”. 281 The main areas identified are

water supply and treatment, solid waste management, air pollution control, and

environmental cleanup. The categorisation and definition of the U.S. environmental industry

is broadly in line with this study. Notable differences would include no categorisation of

energy efficiency or noise pollution in the US; while the marine pollution control sub-sector

is rolled up in a couple of US categories.

While figures vary between sources, the US environmental industry is valued at $282 billion

in 2006 and grew at 6.2%.282 This was the third year in succession of +5% growth by the

281

U.S. Department of Commerce definition. 282 Environmental Business Journal, Annual environmental industry overview, Vol XX, Number 11/12, 2007.


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estimated 30,000 private companies constituting the sector employing approximately 1.6m

jobs. The breakdown by segment for 2005 is illustrated in the table below. The 2006 figures

represent a +6% increase over these figures.

Table 6.1: US Environmental Industry by Segment – 2005 ($ billion)

Environmental Industry Segment

Environmental Services 2005 Analytical Services 1.8 Wastewater Treatment Works 35.6 Solid Waste Management 47.8 Remediation/Industrial Services 10.8 Consulting & Engineering 22.4

Environmental Equipment Water Equipment and Chemicals 24.8

Instruments & Information Systems 4.7

Air Pollution Control Equipment 18.6 Waste Management Equipment 10.1 Process & Prevention Technology 1.5

Resource Management Water Utilities 35.1 Resource Recovery 20.8 Clean Energy Systems & Power 22.3 TOTALS: 264.6

Source: Environmental Business Journal (EBJ), Environmental Business International, Inc., San

Diego, Revenues generated by private and public sector entities, Copyright EBI Inc.

The basic service provision of water, wastewater utilities and solid waste management to

domestic and commercial users make up 50% of the total US Environmental market. The US

Market differs to that of the EU; the US market consists of large numbers of small-medium

enterprises operating regionally compared with the EU market which is dominated by large

firms, typically divisions of well-capitalised conglomerates.283 The US domestic market for

environmental technologies is of such scale that only a few firms are engaged in exporting

internationally.

Environmental cleanup represents a significant element of the overall US EGS sector – a

legacy of an industrial past that has left large tracts of land and water in a chronically

polluted state. The cleanup sites are known as Superfund sites. It is also the name of the

fund established by the comprehensive environmental response, compensation and liability

act of 1980. This law was enacted in the wake of the discovery of toxic waste dumps

283 Avery, Brock et al. Journal of Agricultural and Applied Economics, April 2004.


189

throughout the U.S. It allows the EPA to clean up such sites and to compel responsible

parties to perform cleanups or reimburse the government for EPA-lead cleanups.284 Over the

past 20 years, the US EPA have located and analysed tens of thousands of hazardous waste

sites, there are currently 1,240 superfunds on the national priority list and 317 delisted. This

sector is currently valued in excess of $20 bn. annually.

While not commonly categorised under the US definition of environmental goods and

services, the biggest growth sector in the US is the response to climate change and energy

security. The fact that the U.S. has not signed the Kyoto Protocol does not mean it is not

facing up to the threat of climate change. The U.S. is entrusting technology to point them

towards a low carbon emission future. This is most vividly demonstrated through their

massive deployment of venture capital and federal funding into biofuels and solar energy in

what has been dubbed the ‘greentech’ sector, the VC side is covered elsewhere in this

report. It also fits in with a stated government policy to move away from dependency on oil

imports from geo-politically unstable parts of the world. In the absence of increased oil

production from domestic reserves, the US has focused on a slew of alternative energies.

Despite their reluctance to sign up to international climate change agreements, the scale of

the U.S. response with a number of EGS sub-sectors, in particular renewable energy and

energy efficiency, has seen an extraordinary level of investment in a very short time.

Renewable energy has been growing at unprecedented rates accounting for 22% of new

nameplate electricity capacity additions in the US in 2006, up from just 2% in 2004. In 2006,

the U.S. surpassed Germany as the world leader in annual installed capacity of wind energy

with the installation of an additional 2.4 GW.285 The US continues to lead the world in

geothermal electricity generation with 2.9 GW of installed capacity, with a potential for

conventional geothermal of 20 GW and for enhanced geothermal of 100 GW.286 This growth

looks set to continue in 2007 where the scaling of renewables will yield 4 GW of new

installed wind energy and 3 GW of concentrating solar power (CSP) projects.287 To put the 3

GW into perspective, it would be equivalent of building three Moneypoint generating

stations (Ireland’s largest power plant) in a year.

Overall, these 3 sources of non-hydro renewables – Wind, Geothermal and Solar doubled

their installed capacity in the US between 2000 and 2007.

With solar increasingly being viewed as a major contributor in the area of renewable energy the race is

on to produce the next generation of solar cells. A major milestone was passed on December 28th 2007

with the first commercial production of mass-produced wafer-thin solar cells printed on to Aluminium

film. This has been accomplished by a US company based in California called Nanosolar. The order books

284 www.epa.gov/superfund 285

Energy Information Agency. www.eia.doe.gov 286 U.S. Department of Energy-EERE, National Energy Renewable Laboratory. 287

USDOE/EERE 2007.

http://www.epa.gov/superfund

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are filled until mid-2009 and they are claiming to produce solar cells at a price competitive with the

price of electricity generated from coal. According to the Earth Policy Institute in Washington, solar is

now the fastest growing electricity source, doubling every 2 years.

An important aside relevant to Ireland is the fact that Nanosolar have already selected Germany as their

European manufacturing base and expect to start production there soon. This most probably reflects

Germany’s pre-eminence as the main European country for solar development and installation. What

framework needs to be put in place to ensure that we can compete for these ‘Green Collar’ jobs?

In early January 2008, Germany’s SCHOTT AG has selected the municipality of Mesa del Sol near

Albuquerque, New Mexico, for the location of its new plant for manufacturing glass and optical

equipment for solar-energy systems. Forest City Enterprises, Inc. will build the new, 200,000-square-

foot for SCHOTT Solar, Inc. on 80 acres. The developers said that the SCHOTT project will generate 350

jobs initially and as many as 1,500 jobs when all phases of the plant are complete. The plans call for an

initial investment of $100 million in the project. Construction of the first phase will begin during the

early part of 2008, and production is scheduled to begin in the spring of 2009.

These are the start of a wave of high quality ‘Green Collar’ jobs being created throughout the world. The

economies in the jump-seat to benefit from this investment are those who have provided the

framework (feed-in tariffs, Germany, R&D infrastructure, US). The challenge for Ireland is to build a

technical capability in these areas to attract these high quality investment opportunities.

In the area of biofuels, the US accounted for 36% of worldwide ethanol production.288 The

first of six US funded commercial-scale cellulosic ethanol bio-refineries broke ground in

November 2007, kick-starting production of 60 million gallons of cellulosic ethanol on-target

to cost-competitive scaling by 2012.289 This is expected to ensure that the US government

meets its target ‘Twenty in Ten’ target (of reducing motoring fuel use by 20% in ten years).

Some aspects of biofuels are losing their gloss as a form of alternative energy due to little

net benefit in the energy balance equation and concerns over knock-on effects on global

food prices. Cellulosic Ethanol does offer the best prospect as a biofuels for the future with

the energy balance equation showing a 1:2.36 step up versus the best case of 1:1.3 with

corn ethanol. Cellulosic ethanol also offers a 91% reduction in GHG emissions versus petrol

compared with a 22% reduction in GHG emissions versus petrol provided by corn ethanol. 290

The US response to energy efficiency concentrates around the metric of energy intensity

reduction (energy consumption per dollar of GDP) which has reduced by 13% since 2000.

The U.S. government, the largest energy consumer in the US has committed to a 30%

reduction in building energy intensity (energy per square foot) by 2015.291

The Department of Energy is leading development and validation of cost-competitive zero-

energy building technologies that will enable buildings to be secure and sustainable sources

of distributed energy. The DOE is supporting advanced building codes that would decrease 288

Renewable Fuels Association, April 2007. 289 U.S. DOE Feb./Nov. 2007. 290

Joel K. Bourne, National Geographic, October 2007. 291 U.S. government executive order 13423.


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new building energy consumption by 30% by 2010.292 On a domestic level, sales of compact

fluorescent lighting (CFL) now account for 20% of retail sales; with a similar level of activity

observed in other domestic energy efficiency measures. 293

The scaling up of renewable energy and energy efficiency can be attributed to 3 main

reasons; prices signals from the rise in oil prices, strategic moves to address geo-political

concerns and a sustained investment programme undertaken by the US Government. The

US DOE EERE office funded $750 million for research, development and deployment of

renewable energy and energy efficiency technologies in 2006 with $350m allocated towards

energy efficiency, and $400m in renewable energy applications.294 The US DOE Solar America

initiative doubled US investment in solar energy from $80m to approximately $160m per

year helping catalyse an increase in global market capitalisation for pure-play solar

photovoltaic companies from $40 billion to over $160 billion in the last 18 months.295

Bp beyond petroleum (www.bp.com/us)

In 1997, BP’s then CEO Lord Browne - in a speech at Stanford University – spoke about the need for

the energy industry to accept the science of climate change and begin to do something about it. BP

committed to reduce its GHG emissions to below 1990 levels by 2010; this target was achieved nine

years ahead of schedule. The setting up of BP Solar, one of the world’s largest solar manufacturers,

was a key strategic move, as was the establishment of BP’s Alternative Energy Group in 2005 with a

commitment of €8 billion of investment over ten years in four sectors: solar; wins; gas-fired power;

and hydrogen power and carbon sequestration and storage. BP has acquired several small wind

power companies throughout the US and formed a strategic partnership with Clipper Wind

(www.clipperwind.com/) one of the largest wind turbine manufacturers in America. BP’s first wind

farm (a 300MW unit) was commissioned in December 2007. BP built a 1000MW gas-fired

cogeneration plant in Korea within the same time frame. In addition to low-carbon power, BP invests

heavily in the R&D of low carbon fuels and has partnered with DuPont to import biobutanol from an

existing first generation manufacturing facility in China to blend with petrol for export to the UK

market. Some €500m has been invested in an Energy Biosciences Institute co-located at UC Berkeley

and the University of Illinois at Urbane-Champagne. According to BP ‘…..it is all in the name of good

business as part of a sustainable business strategy that will reap both environmental and economic

benefits.’

Waste Management (www.wm.com)

This US company deals with the waste of its 22 million customers and produces more renewable

energy each year than the entire North American solar industry. It strategic goals to 2020 include:

increase waste-based energy production; increase in the volume of recyclable materials; investment

in clean technologies; and preserving and restoring more wildlife habitat. It operates 33 landfills and

hopes to increase this number to 100 by 2020. To increase the volume of recyclable materials, the

292

U.S. DOE/EERE, 2007. 293 U.S. DOE/EERE, January 15th 2007. 294

IEA 20/20 Report. 295 Bloomberg Business, November 2007.

http://www.bp.com/us

http://www.clipperwind.com/

http://www.wm.com/


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company uses a profitable single stream recycling technology. New areas of business include ewaste,

and construction and demolition recycling. In partnership with Sony, Waste Management has

developed an eCycling Programme aimed at providing a drop off within 20 minutes of 90% of

population centres. The company is investing in the next generation of landfill technologies that could

produce electricity, create more space in landfills, and make diesel from landfill gases. Waste

Management’s consulting subsidiary works with customer companies to reduce their waste streams.

According to the CEO of Waste Management ‘…..where most see waste, we see opportunity.’

Another prominent area in the deployment of funding has been the decision by US DOE in its

2008 budget to invest $1.2 Billion over five years to accelerate hydrogen and fuel cell

technology.

In summary, in this brief review of the US EGS sector, our focus has been directed at the sub-

sectors attracting the most attention and investment. The sub-sectors of renewable energy

and energy efficiency are dominating the US landscape in this regard with record and

increasing levels of investment from government, VC and commercial sources. The spinoff

from this investment is the emergence of the growth of ‘greencollar’ jobs.

6.2.1. Venture Capital Activity

As indicated earlier, US investment in the cleantech sector has increased dramatically in

recent years. Looking in a bit more detail into which sectors the venture capital money is

being invested; in the US investment in alternative energies with bio fuel production have

attracted the highest level of funding. However, so far in 2007 venture capital investments

in solar power have surpassed investments in bio fuel, reaching $1.2 billion and exceeding to

the total investment in bio fuels in 2006. The growth in solar investment has gone from

$200 million in 2005 to $400 million in 2006 and appearing on-course to triple that figure in

2007. Investment in solar looks set to continue in 2008, the battleground among the venture

capital community will be picking the next generation thin-film materials that will replace

crystalline technologies.

Very recent data presented by Greentech Media suggests that Greentech: VC investment in

renewable and cleantech hit $3.4 billion in 2007. Venture capital (VC) investment in

renewable energy development reached “an unprecedented level” of $3.4 billion in 2007,

led by an investment of more than $1.05 billion in solar energy technology through more

than 70 VC rounds, according to data recently released by Greentech Media, Inc.

(Cambridge, MA). Battery technology was also well-supported by VC last year, at $33.9

million, followed by the energy efficiency/smart grid sector at $419.1 million, Greentech

reported. “VC investment in renewable energy in 2007 was up 50% over the previous year

with more than 220 funding rounds across the entire spectrum of renewable energy,” said

Eric Wesoff, senior analyst at Greentech Media. He added, “investors are looking for 2008

to 2010 to be the years of renewable energy exits.” Notable recipients of VC investment in

2007 were HelioVolt’s $101 million for thin-film photovoltaics, Great Point’s $100 million for

coal gasification, Amyris’ $70 million for synthetic biology and biofuels, and A123’s $70


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million for innovative battery technology.296

There is concern being expressed in some quarters that the hype surrounding bio fuels could

lead to excessive concentration of venture capital in this area and excessive valuations

whereas other cleantech sub-sectors like carbon sequestration, water purification and

energy storage are seeing a much slower inflow of capital. 297

6.3. Austria

Austria has long been considered a leading country regarding environmental protection and

initiatives. It has identified the environmental and economic benefits of environmental

technologies and these benefits have been closely monitored as far back as 1993.298

The Ernst & Young study of EU eco-industries (2004 data) indicated that Austrian turnover in

that sector was about €10.1 billion, or eight times that of Ireland (€1.2 billion). 299

Table 6.3: Relative Size of EGS Sector in Austria

Turnover of eco-industries per capita, again estimated by Ernst & Young, is shown in the

following figure. From this it can be seen that Denmark and Austria are the European leaders

with over €1600 per capita in Denmark and over €1200 per capita in Austria. Ireland’s 296 Climate Change Business Journal, January 18, 2008. 297 Library House, Cleantech goes mainstream, September 2007. 298

Koppl, Angela The Austrian Environmental Industry Summary of Results WIFO, Vienna, 2006. 299 Ernst and Young, Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU European Commission DG Environment, Brussels, 2006.


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turnover per capita is just less than €300.

Figure 6.1: Relative Turnover of EGS Sector in Austria

Figure xxx: Turnover of eco-industries per capita in EU - 25

With regard to turnover of eco-industries as a percentage of GDP there is an EU average of

2.3%. The highest is Denmark, with Austria the second highest in the EU-25 at about 4.3%,

nearly double the EU average, as the following figure shows. With regard to the Irish

position in Figure 6.2, it should be noted that GDP/GNP ratio in Ireland is abnormally high

and percentage of GNP might be a better guide.

Figure 6.2: Relative Turnover of Eco-Industries as a Percentage of GDP

Some doubt has been case upon the figures in the Ernst & Young study and the scale of


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technologies included may not tally with other studies that have been carried out (see

below). 300

However, it is still clear that, in Austria, the development of environmental technologies is a

high strategic priority at Government level. For example the Austrian Federal Ministry for

Economy and Labour has set up a website of such technologies. 301 This comprises a

searchable database of about 500 companies under region, name and keyword (services).

Companies in Austria have also set up national and regional associations of environmental

technology suppliers. For example, Austrian Environment is an Association of Austrian

companies in all sectors of Environmental Technologies and Waste Management which was

set up in 1999 in the framework of the “Austrian Export–Offensive”. 302 According to this

association there are 1,500 suppliers of environmental technologies and services in Austria.

Regional clusters have also been developed.

For example, Eco World Styria comprises a comprehensive network of more than 500

companies in the field of energy and environmental technology in the State of Styria alone.

The network claims a turnover growth for its companies in 2006 (from ‘previous years’) of

14.9% to €1.69 billion. Companies in the area of biomass, solar energy, material flow

management, water and wastewater recorded a growth in the number of employees of

around 12.6 % to 10,700. According to a survey they carried out, member companies of the

network have themselves recorded an overall turnover of €4.25 billion in 2006 (for all their

activities), with €1.68 billion for clean energy and environmental technology alone (an

increase of 14.9%), which corresponds with about 5 % of the Styrian gross regional product.

While areas such as water/wastewater and material flow management currently generate

the highest turnover, the field of renewable energy has recorded the highest growth: 30%

for solar and 18% for biomass. The drivers of growth are particularly small and medium-sized

companies. From the total of 19,700 employees in the member companies, some 10,700

work in the field of renewable energy and environmental technology, with growth of 12.6%.

This network provides a 24-hour answering service to its companies and potential clients

and its website shows the diversity of companies and solutions provided in that province,

with another searchable database of service providers. 303 It provides a wide range of

services to its constituent companies as figure 6.3 shows and has achieved a high level of

branding for the EGS sector in this region, in all of Austria and abroad. It has published

several publications and reports (in both German and English) outlining the nature and

advances of EGS services available in the region including a regular magazine304 and a

300 Private discussions with industry expert from WIFO (at EnvieTech Conference in Vienna, January 2008) and Xavier Leflaive, OECD (at EPA STRIVE Conference, Dublin February, 2008). 301

www.umwelttechnik.co.at. 302 http://www.austrian-environment.at/eng/index.htm 303

www.eco.at 304 Eco World Magazine: Leadership in Energy and Environmental Technology (3 issues produced)

http://www.umwelttechnik.co.at/

http://www.austrian-environment.at/eng/index.htm

http://www.eco.at/


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product guide305 which categorises the companies and products under several categories for

easy access (Biomass/Biogas/Diesel; Solar; Material flow; Water/Wastewater; Energy

Efficiency and Other).

Figure 6.3 Services offered to companies by Eco World Styria

6.3.1. Economic Importance of Environmental Technologies in Austria

Several studies have been carried out to quantify environmental technologies in Austria. The

most recent, in 2006 (with data up to 2003), by WIFO 273 gives some interesting data and

conclusions. However, the data from this study should also be treated with caution with

respect to any comparative analysis as the definitions of EGS are not the same in each

country. It would appear from an analysis of the WIFO report, for example, that it does not

include many of the activities that are included in this Irish study. It also does not tally with

some of the information provided by the Austrian EGS networks given above.

According to the WIFO study in 2003, an estimated 331 companies produced environmental

technologies in Austria. The estimate for total turnover was €3.78 billion for the Austrian

environmental technology industry. These companies employed approximately 17,200

individuals in 2003. Exports by the Austrian environmental technology industry are

estimated to amount to €2.45 billion. The growth trend from 1993 to 2004 is shown in the

following chart.

WIFO noted a large scale shift from end-of-pipe technologies in 1993 and 1997 to more

integrated and cleaner technologies in 2003. Clean energy technologies are the most

significant mover, contributing to €1.9 billion to turnover and employing almost 7,500

people.

305 Eco World Product Guide 2008


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Figure 6.3: Austrian EGS Sector – Key Indicators

6.3.2. Structure of Austrian Environmental Technology Industry

The figure below shows the breakdown in type of environmental technologies being

provided. From this, it can be seen that, between 1997 and 2003 there has been major

reductions in air and waste related technologies and a major growth (from 21% of turnover

to 48%) in energy. Water and monitoring and control technology markets have stayed

relatively stable.

Figure 6.4: Breakdown of Environmental Technologies


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6.3.3. Demand Drivers

WIFO also examined the drivers for this growth in environmental technology demand.

Interestingly there are significant changes in demand drivers from 2000 to 2005, but this

could relate to the companies queried. Subsidies for investment were seen as the main

driver, with EU, Austrian and other country legislation also being strong drivers.

6.3.4. Markets for Environmental Technologies

Figure 6.5: Environmental Technologies – Key Markets

In the mid 1990s, some 50% of environmental technologies were sold on the Austrian

market and the rest were exported. By 1997, exports had gone up to over 60%. In the WIFO

survey sample, companies were again able to increase their exports, to about 65%. In total,

companies in the sample exported goods to the amount of €1.6 billion. There was little

change in the various markets where these technologies were sold, with the EU-15 being the

major segment in both cases (around 39% in 1997 and 40% in 2003) (half of this was to

Germany), and the Austrian market being second.


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6.3.5. Austrian Masterplan for Environmental Technologies

In 2007 the Austrian Government produced a Masterplan for Environmental Technologies. 306 This ten year national strategy or plan aims to put Austria in the leading position

regarding the share of environmental technologies per GDP worldwide. It also aims to

double the number of people employed in environmental and energy technologies and to

aid Austria achieve its climate protection and other national environmental goals.

The Masterplan contains four strategic fields of action:

1. Promotion of exports - targeted initiatives on central export markets and further

development of the existing export infrastructure for Austrian enterprises.

2. Research and qualification - strengthening the technological competitive position and

training the staff members of enterprises and research institutions

3. Financing - supplementing technological solutions and services with customer-specific

financing offers

4. Making the domestic market more dynamic - safeguarding an innovative domestic

market for products and services at a high technological level.

In order to achieve its goals and to fulfil the strategic fields of action, the Masterplan

contains 30 specific core measures across a range of areas.

There are three early priorities for Austria which will be developed initially: 307

Promoting the Export Offensive for Environmental and Energy Technologies

Representatives of politics and administration should increasingly promote Austrian

environmental and energy technology abroad. The promotion of the Export Initiative

Environmental Technology within the framework of go international takes place through the

cooperation of the Federal Ministry of Agriculture, Forestry, Environment and Water

management, and the Federal Ministry for Economic and Labour Affairs, and in close

coordination with the Austrian Board of Foreign Trade (aussenwirtschaft österreich), the

Austrian Federal Economic Chamber and its 106 foreign trade offices all over the world.

In this context the Office of the Environmental Technology International Network (netzwerk

umwelttechnik international) located at the Austrian board of foreign trade, which was

founded in January 2007, has to be integrated as well as the information and

communication platform, in order to take targeted and coordinated market opening and

market developing measures abroad and to further exploit the export potential for Austrian

companies in this sector. The goal of the export initiative is an increase of the export quota

in the field of environmental technology to 80% within ten years.

306

Bundesministerium für land- und forstwirtschaft, umwelt und wasserwirtschaft land niederösterreich MUT Masterplan Uumwelttechnologie Österreichische: umwelttechnologie auf dem weg in die zukunft. 2007 307 ibid. page 9.


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Starting the innovation-offensive for environmental and energy technology

The establishment of the energy and climate protection fund should contribute to

considerably accelerating the launching of innovative products and services on the market

and to strengthening the competitiveness of Austrian suppliers.

The medium-term goal is to establish a good know-how basis for becoming an international

technology leader in the central sectors of environmental technology by means of setting up

or further developing mission-oriented research and diffusion programmes as well as by

creating centres of excellence.

Further developing the efficiency offensive for buildings

The increased consideration of klima:aktiv criteria for the sustainable construction of

residential buildings and a passive house standard in the housing subsidisation of the

Federal Provinces contributes considerably to a significant reduction of the energy demand

for space heating in Austria.

The medium-term goal is to attain the klima:aktiv standard for 50% with new buildings.

Apart from strengthening the energetic component of housing subsidisation the focus is on

the implementation of ambitious efficiency standards for the energy demand of buildings in

the building regulations. The measures of the Master Plan Environmental Technology on the

renovation of old buildings aim at a rise of the renovation rate and an increase in the

thermal quality of renovation.

6.3.6. Conclusions

While there are some disparities between the data from different sources, environmental

technologies are a strong economic sector in Austria and they continue to grow. This is due

to long term policies and programmes of support and legislation put in place over many

years by the Austrian Government. Businesses and Austria have also seen the economic

potential in this sector and have moved quickly to innovate to take advantage of the drivers

in place. The companies have also developed strong networks and industry support groups,

providing joint services, a strong brand as well as joint business opportunities. The growth in

environmental technologies has been qualitative as well as quantitative with more clean

technologies and clean energy options being developed. This has greatly aided Austria ’s

targets regarding the reduction of GHG emission targets as well as protecting the Austrian

environment.

To achieve similar successes, Ireland also needs a long term national strategy on

environmental technologies with suitable policies, regulation and support mechanisms. The

companies in this sector in Ireland also need to network better, develop support groups,

avail of joint services and create a stronger brand.


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6.4. The United Kingdom

6.4.1. Introduction

In November 2007, the report of the Commission on Environmental Markets and Economic

Performance (CEMEP) was published. The CEMEP was established by the UK Government in

light of the Stern Review on the Economics of Climate Change and drew together

representatives the business community, academia, trade unions and NGOs, with the

Secretariat being jointly provided by the Departments for Environment, Food and Rural

Affairs (Defra), and Business, Enterprise and Regulatory Reform (BERR). Given the fact that

the CEMEP examined many of the issues that have been examined by the present

Forfás/InterTradeIreland study and in light of the fact that its recommendations may impact

on Northern Ireland, then it seemed sensible to at least consider whether its findings and

policy recommendations might also help to inform the policy options arising from the

present study.

The CEMEP report acknowledges that the transition to a low carbon, resource efficient

economy is needed to meet the global challenges of climate change and sustainable

development. “There will be winners and losers, but there are considerable opportunities for

those countries and businesses with the foresight to seize them”.

The UK Government has committed to making the UK a global leader in low-carbon and

environmental markets. The goal is to make the UK one of the best locations in the world to

develop and introduce low-carbon and resource-efficient products, processes and services

and by doing so, attract the investment today that will help create tomorrow’s prosperity

and jobs, as well as contributing to a cleaner environment.

UK Government has acknowledged that achieving this goal will require a policy framework

that drives investment and enterprise in environmental markets and provides more effective

support for the development and commercialization of environmental innovations. In fact,

the conclusions in the CEMEP report are mainly targeted at Government because CEMEP

believes that environmental market opportunities are heavily influenced and, in some cases,

driven by the policy framework set by Government.

Both the UK CEMEP and the UK Corporate Leaders Group on Climate Change underlined the

fact that in order to stimulate private sector investment a strong policy framework is needed

that creates a long-term value for carbon emission reductions and consistently supports and

incentivises the development of new technologies. 308 However, implementing these

principles can be difficult in practice.

The following are the key CEMEP recommendations:

308

The Corporate Leaders Group on Climate Change comprises major UK and international companies, including ABN Amro, Centrica, Shell, Tesco and Vodaphone.


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• Setting credible goals and targets that give business clear signals about the future

direction of environmental policies.

• Favouring market mechanisms to ensure that businesses have greater flexibility to

achieve environmental objectives in the most cost effective ways.

• Avoiding prescribing particular solutions to achieve the desired outcome, and allowing

for the development of innovative, new solutions in policy formation and appraisal.

• Establishing a ‘level playing field’ through the removal of regulatory and institutional

barriers that generally favour incumbent technologies.

6.4.2. Setting Credible Goals

Government needs to set very clear goals or targets which will help to provide businesses

and investors with greater certainty about the direction of policy. To be effective they need

to be credible, unambiguous and set over a long enough timescale to influence investment

decisions.

Moreover, it is also important to ensure that environmental goals are fully supported across

policy areas, so, for example, targets for renewable energy are not undermined by the

planning system.

In this context too, it is important that Government should ensure that it sets out and

adheres to well-defined timetables for the implementation of environmental legislation, as

any delay can undermine investment and damage confidence in the direction of policy.

6.4.3. Market-Based Instruments

As a general principle too, it is clear that market-based instruments are preferable to direct

regulation. Market based instruments enables businesses to adapt and respond to the

policy objective in a more economically efficient manner.

6.4.4. Dynamic Regulation

While market based instruments are preferred, it is clear that in some instances, well-

designed direct regulation can be an effective way to supplement market-based

instruments, and in some cases can help to stimulate innovation and product development.

Experience from other Member States has shown that some Governments have used

progressively updated or ‘dynamic’ performance standards to drive improvements in the

resource efficiency of products. This is based on the idea that many existing regulations

simply enforce minimum standards or specify best available technology, which tends to lock

in existing technologies and provide no incentive to drive further improvements in

performance.

By providing incentives or aid to firms to exceed existing performance standards, firms can


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be encouraged to strive to innovate to continuously improve their environmental

performance. Moreover, such incentives (properly structured) are fully compatible with the

EU State Aid rules.

6.4.5. Removing Institutional Barriers to New Technology

An interesting conclusion to emerge from the UK CEMEP report was the role that

Government can unwittingly play in locking in existing technologies and inhibiting the uptake

of new and innovative goods and services. An example of this is the business appraisal

process used by Government Departments and State agencies, which tends to focus on

currently available solutions, where costs and benefits are more readily identifiable. This

tends to work against the adoption of new technology – particularly where the initial capital

cost may be high, relative to the incumbent technology, and the benefits in terms of

environmental performance may accrue over a long period of time.

The UK CEMEP argued for a different approach that allows for the potential of innovation

and investment to deliver better, cheaper solutions to be better taken into account in

standard business appraisal processes. They called on the UK Government to commission a

study of how the long-term needs and opportunities from innovation can be incorporated

into cost-benefit analysis guidance, with a view to assessing longer-term impacts on

economic performance routinely in environmental policy appraisal.

Moreover, it is also interesting to note that the UK has developed a new Regulatory Impact

Assessment process which explicitly incorporates an assessment of the impact on carbon

emissions, as well as on other environmental issues and sustainable development. This is

something that should also be considered in an Irish context.

6.4.6. Science and Innovation Strategies

In the UK, Government Departments and many agencies publish science and innovation

strategies. But many of these focus only on research to provide information for policy

formulation and do not address the Department’s or agency’s role in inducing and rewarding

private sector innovation that furthers the Government’s objectives, including on the

environment. CEMEP recommended that science and innovation strategies should better

reflect the opportunity of environmental markets, and that the requirement to produce

them should be extended to key regulatory agencies and procurement functions.

6.4.7. Testing and Certification

Product testing and certification has been identified by firms in the environmental sector as

one of the most significant challenges businesses face in bringing a new product to market.

This is particularly difficult where established standards do not exist, as can be the case for

innovative products. Customers in this field often have little incentive to make the switch

from tried and tested products and processes to more sustainable alternatives, and


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certification is particularly important to overcome this.

In the UK, the Carbon Trust has developed a programme of activity dedicated to helping

businesses overcome technical and market barriers to the deployment of innovative

technologies using tools such as field trials and performance monitoring and evaluation. At

the EU level too, the European Commission has proposed the establishment of an EU

Environmental Performance Verification scheme to help address some of the problems

faced by environmental innovators.

6.4.8. The Role of Public Procurement

Public procurement potentially has a very important role to play in fostering and promoting

the development and adoption of new environmental goods and services. By leading the

way in this area, and by providing a “market pull”, public procurement could help to

facilitate the commercial viability of an innovative good or service and help to attract

investment.

In the UK, for example, a number of initiatives are taking place in this area. The Forward

Commitment Procurement Process (FCP), pioneered by the business-led Environmental

Innovations Advisory Group (EIAG), involves providing advance information of future needs,

early engagement with potential suppliers and – most importantly – the incentive of a

Forward Commitment: an agreement to purchase a product that currently does not exist, at

a specified future date, providing it delivers agreed performance levels and cost. The EIAG is

also working with BERR, Defra, the National Health Service, the Office of Government

Commerce and the Greater London Authority to use Government procurement to create a

market for a new generation of innovative and energy-efficient lighting, making it more

affordable and widely available. Indeed, the UK Government, in its Sustainable Procurement

Action Plan, has committed to replicating the FCP model more widely in the public sector.

CEMEP believes there are two essential elements to achieving this in practice: first, a more

systematic process is needed to identify where better, more cost-effective solutions are

needed to achieve environmental policy objectives and targets; and second, the public

sector’s capability to carry out this type of supply chain management practice needs to be

developed and enhanced.

6.4.9. The Use of Environmental Mandates

The CEMEP report also acknowledged the fact that regulation can be another powerful way

of creating important early markets and stimulating innovation and investment. It pointed

to the California Zero Emissions Mandate as a good example, as well as the UK Code for

Sustainable Homes. If reflected in building regulations as planned, the CEMEP concluded

that the Code would create an ambitious mandate for zero net carbon homes in England.

Building such homes cost efficiently and at scale will require new technologies and

techniques that have yet to be developed, creating new economic opportunities. Using


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market pull measures including public procurement in conjunction with such regulation can

help ensure these opportunities are maximised.

6.4.10. Sectoral Deployment Support

The CEMEP report also drew attention to the important role that sectoral deployment

support can play. For example, sectoral deployment support has been successful in

stimulating the development of renewable energy, such as wind power and solar

photovoltaics (PV), and are used widely in the EU and elsewhere to build scale and reduce

costs of a technology that is not currently cost competitive.

It is clear that targeted sectoral initiatives will be necessary in many instances to stimulate

the development and uptake of renewable energy technologies that would not otherwise be

widely adopted. While there are inevitably costs associated with such support, they could

prove the best option in the longer term.

The CEMEP, however, noted that the choice of the appropriate policy measures will depend

on the stage of the innovation process being supported. Policies to support investment in

high-risk, early-stage options will be most effective if, in addition to providing revenue, they

are designed to reduce or remove revenue risks associated with price volatility. “Support

should target those applications with significant potential for mass market rollout, and

should take into account areas of natural advantage for the UK, such as offshore

renewables.”

The report also draws attention to the findings of the UK Energy Research Centre which

advocates the following ‘risk hierarchy’ linking policy to technology maturity in the low-

carbon and renewable energy generation sector309.

Capital subsidies and/or PFI equity stakes are most likely to be appropriate for wholly

new technologies emerging from R&D, or for unproven and large-scale investments with

limited prospect of incremental learning through small-scale early commercial units: e.g.

carbon capture and storage and possibly wave and tidal power.

Fixed-price tariff schemes may be most appropriate for initial roll-out of emerging

technologies that are demonstrated, but yet to be used on a large scale: e.g. offshore

wind, also possibly energy efficiency schemes in old building stock.

Market-based schemes, including taxation and ‘cap and trade’ are generally most suited

to proven technologies, or to incentivise least-cost means for short-term carbon

reduction: e.g. onshore wind.

6.4.11. Support for Research, Development and Demonstration

The CEMEP report also underlined the importance of support for R&D, particularly given the

309 Source: Investment in electricity generation: the role of costs, incentives and risks, UKERC (2007).


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fact that market failures resulting in under-investment in RD&D by the private sector are

well established. Long lead times and high costs of technology development are significant

factors in many environmental sectors, particularly energy. They are often compounded by

the need to displace low-cost incumbent technologies. The CEMEP believe that targeted

support will help to leverage private sector investment into the technologies required to

meet future environmental objectives and will help facilitate generation of intellectual

property and the development of new products and services, building options to meet

future environmental needs and potentially creating competitive advantages

To leverage best overall value for money from the funds available, the CEMEP recommend

that existing capabilities and new initiatives in RD&D across the public sector and industry

should be better coordinated and that synergies should be sought between different strands

of innovation support, including linking RD&D support to procurement opportunities.

However, it warns that Government should be careful not to ‘pick winners’ by focusing its

attention and support on a single or small number of technologies to address environmental

challenges. Therefore, the CEMEP recommends that a portfolio of candidate technologies

should be supported. While it is acknowledged that few, if any, of these emerging

technologies will at first be cost effective compared with the technologies they are designed

to replace, it is, however, prudent to continue to invest in them to create an option for

commercial deployment if the technology becomes economic in the future. The CEMEP

believe that without what are sometimes relatively small amounts of investment in the

interim, this option may no longer be open at the crucial time.

The CEMEP report also drew attention to the fact that a commonly articulated barrier to the

commercialisation of environmental technologies by the private sector is the perception of

‘funding cliffs’ (i.e. the concern that Government grant support is available for early stage

R&D, but funding is not forthcoming at the demonstration stage when technology and

commercial risks are at their highest). To overcome this problem, the CEMEP recommend

that Government support should aim to be as consistent as possible, through the life-cycle

of a technology’s development, to allow that technology to make progress towards

commercial deployment. By way of example, the CEMEP noted that long term public

support for innovative technologies has been seen where important low-carbon technology

breakthroughs have occurred previously, e.g. Danish support for onshore wind through the

1980s and 1990s and Japanese support for Solar PV from the 1970s.

In conclusion, the CEMEP recommended that an ‘Options Approach’ should be taken to

RD&D support, whereby:

a diverse portfolio of emerging technologies is supported as consistently as possible

beyond early-stage R&D and through the development lifecycle; but

progress is reviewed at the end of each development stage, and support withdrawn for

underperforming technologies.


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On 1 May 2008, the UK Government responded to the CEMEP report; Building a low carbon

economy: unlocking innovation and skills. 310

6.5. Lead Market Initiative for Europe

The EU’s Competitiveness Council instructed the European Commission to bring forward an

initiative on lead markets, based on a broad stakeholder consultation, for defining a valid

approach for fostering the emergence of markets with high economic and societal value. The

Commission’s response – the Lead Market Initiative (LMI) – selected renewable, waste

recycling and sustainable construction among its priorities.311 Lead markets have a number

of characteristics. For example, there is a high degree of customer intelligence, with users

having a certain degree of anticipatory knowledge of the technology and recognising the

premium to be paid for innovation.

These sub-sectors were chosen because they are demand driven (instead of technology

pull). There is strong market potential in Europe and on a global level within a short time

span. In addition, the market segment is broad, with a range of interconnected products and

services capable of being offered simultaneously. The Commission also adopted the policy of

not picking winners on the basis that technologies are sufficiently mature. Dictating

technological choices might therefore pre-empt the development of competing and possibly

economically better options.

The construction sector was selected as buildings account for 42% of final energy

consumption and produce some 35% of all GHG emissions. The sector represents one third

of EU GDP. Almost 50% of all materials extracted from the earth are transformed into

construction materials and products. Sustainable construction encompasses energy efficient

appliances, and developing solutions for residential and non-residential buildings as well as

for infrastructural assets. A Task Force identified specific market opportunities for

sustainable construction and innovation in market segments. For example, a priority is to

change attitudes in the construction supply chain to a full life cycle approach. This includes

knowledge in energy consumption, environmental impacts, indoor environment, safety, the

adaptability of structures and premises, service life planning and facility management.

Barriers inhibiting the sector include fragmented standards and a fragmented supply chain

and a general absence of Green Public Procurement (in a market where the public sector

accounts for 40% of total production). Among the measures recommended to develop the

potential of the sector are: the development of guidance for the choice between EMAT

(economically the most advantageous tender) and lowest price and for the use of life cycle

costs in construction works; expanding the scope of the Energy Building Directive; and the

adoption of performance-based approach in national building regulations.

The recycling sector was another priority as the EU has around 50% of the global waste and

310

http://www.defra.gov.uk/environment/business/commission/index.htm 311

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee of the Regions, COM (2007) 860 final dated 20 December 2007.


208

recycling industry. The EU recycling sector comprises some 60,000 companies with nearly

70% categorised as small firms. Despite significant market potential, many barriers to

market development remain. There are, according to the Commission, indications that the

international trade in recycled materials will continue to grow. Among the measures

recommended is a review of the WEEE Directive (due in 2008) which would promote the

long-term development of recycling materials. A new Thematic Strategy on the prevention

and recycling of waste will also be brought forward (in 2010). Another barrier is the lack of

certainty about the quality of certain recycled products. The Commission also recommends

the procurement of recycled products, technologies and related services as part of Green

Public Procurement. It is notable that countries such as China, Korea, Australia, Canada and

the State of California are introducing WEEE, ELV and RoHS legislation similar to the EU. This

provides an opportunity for European companies to sell their know how into these markets.

The final sector of the LMI that is relevant to this report is renewable. The EU RES sector has

a €20 billion turnover and provides some 300,000 jobs. A ‘roadmap’ for the sector is being

developed. The Commission believes that the development of renewable resources is being

held back by three factors. First, demand is sub-optimal given that the external costs of

energy use are not fully reflected in energy prices. Due to this low level of demand

important learning curves effects which would lead to lower prices in several technologies

are being exploited too slowly. Finally, the fragmentation of RES support systems is also an

inhibitor.

The LMI, as does this report, points to the regulatory regime as a key driver. The Commission

is a strong proponent of Green Public Procurement and a step change in improving

standards, labelling and certification. The Commission believes that the new State aid

guidelines on environmental protection should be used by Member States to exploit new

business opportunities.

6.6. Conclusions

This chapter has examined the EGS sector in a number of diverse markets - Austria, US and

UK The analysis concentrated on a number of factors included market mechanisms,

domestic regulations and key sub-sectors. Each of these markets possesses characteristics

that, individually or collectively, provide Ireland and Northern Ireland with key pointers to

the successful development of the EGS sector.

Looking at market focus, the contrast between the US and Austria is particularly evident; the

US has established a system of supports and enablers that has resulted in a rapid inflow of

capital providing a huge impetus to the renewable energy sub-sector; whereas in Austria

renewable energy forms part of an integrated Master Plan across a number of EGS sub-

sectors. The UK has again adopted a more broad-based strategic approach, avoiding the

‘picking of winners’.

Common to all three markets, and a recurring comment in our discussions with industry


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sources, is the need for a regulatory environment that provides clear, consistent and long-

term signals.

The lead-time behind commercialisation of some of EGS technologies and the capital

construction costs require a long-term approach to attract capital. These serve to act as a

spur to domestic markets and, building on that knowledge position, countries like Austria

have become very export focused (65% of EGS sector is now exported). In the US, the scale

of the domestic market and availability of capital has allowed US EGS companies to focus

internally; for example, on the S&P global eco index there are a number of US companies

listed whose operations are exclusively domestic.

For Ireland and Northern Ireland, the messages emerging are clear; allied to implementation

of EU environmental and energy Directives, set an ambitious strategic policy framework that

will stimulate the development of the EGS as enterprises respond to the rigorous

implementation of legislation in areas such as water quality, energy efficiency, renewable

energy etc.


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7. CHAPTER 7: CONCLUSIONS

7.1. Introduction

It is recalled that the primary focus of this report is to identify new business opportunities

within the EGS sector.

The report provides clear evidence that for some EGS sub-sectors in Ireland/Northern

Ireland (renewables, clean technologies, water and environmental consultancy for instance)

the domestic and export markets are dynamic and growing.

Having assessed the strengths and weaknesses of the sub-sectors, there is also clear

evidence that the prospects of some sub-sectors are better than others.

The principal drivers that are influencing investment and economic activity have been

analysed and the barriers that could inhibit the further development of the sector have been

identified. In addition, many examples of best international, and indeed national, practice at

company and government level have been highlighted.

In this final chapter, the evidence to hand is assessed with a view to informing the

development of a strategic policy framework for an all-island approach to support the

development of priority EGS sub-sectors. Ireland and Northern Ireland must plan now for a

transition to a low carbon, resource-efficient economy in response to the global challenge of

climate change and sustainable development.

There will inevitably be winners and losers. However, it is also clear there are significant new

business opportunities for EGS companies in the domestic, UK and some European and

international markets as the enterprise sector is seeking to improve its environmental

performance.

In coming to conclusions, the Consultants emphasise the following:

Enterprise policy in Ireland has traditionally focused on maximising export potential

rather than on fostering the domestic market. The evidence in this report suggests

that agency support (and the setting of a clear strategic policy framework for the EGS

sector) is needed to facilitate the growth of both domestic sales and export

opportunities.

Regulatory compliance was found to be a major driver of growth within the EGS sector

and the need for clear and consistent environmental policy and regulation was strongly

articulated by industry representatives. However, there is no suggestion that any

additional regulatory burden should be placed on a sector that is already facing

competitive pressures. What is needed is not more regulation, but clearer and more

consistent regulation. What the report suggests, therefore, is that a fresh look needs


211

to be taken at the business opportunities arising from the consistent implementation

of existing EU Directives and related measures.

With notable exceptions, the EGS sector is playing catch-up. In this context, while

many potential new business opportunities have been identified, companies

themselves will determine if the cost competitive conditions are sufficiently favourable

to invest in expanding their business. What the report seeks to do, therefore, is to set

out the optimum framework conditions which, if present, would encourage companies

to innovate and expand their operations.

While the EGS sector is most aware of its “green and clean” image, this raises the much

wider issue of the greening of manufacturing industry and internationally traded

services, for example through the introduction of industry guidelines. A further study

about this branding initiative could be undertaken.

While not referenced in detail, many of the sub-sector business opportunities

(pollution control and monitoring, clean technologies and processes, and RES-E and

energy efficiency) will be based on the use of ICT, where Ireland has particular

competitive advantages.

It is beyond the Terms of Reference of this study to identify, for example, the

capabilities of firms in the EGS market place; or to identify product specific goods that

have the greatest potential. This is a strategic study, not a market research report.

In carrying out this research significant statistical and data gaps have been identified.

This is largely due to the unavailability at the present time of sufficiently detailed CSO

statistics and therefore, it is not possible to provide key economic and financial data

for the majority of sub-sectors.

7.2. Opportunities

The cost compliance burden resulting from the implementation of EU environmental

Directives is high and will get higher. For example, the European Commission estimate the

cost of the EU’s climate change/renewable policy package could be €60 billion EU-wide. A

compliance burden of this scale has already had a significant impact on investors’

decisions.312

On the other side of the equation, the need to respect environmental rules and greater

corporate awareness about sustainable development – both largely driven by consumer

behaviour – is rapidly changing the way certain sectors are conducting their commerce, in

particular as regards sustainability requirements being pushed onto suppliers.

While all EGS sub-sectors have prospects, state resources are limited so therefore priorities

have to be set. This does not mean that any sub-sector should be ignored by the state

agencies. Rather a higher priority should be given to a limited number of niche areas within

sub-sectors that have the greatest potential to make a breakthrough into what is a very

competitive European market.

312

As articulated by speakers at the Business Europe conference on ‘Greening The Environment’ held in Brussels on 21/22 February 2008.


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In this regard, the following criteria were used in assessing the EGS goods and services with

the greatest potential:

1. Clear demonstration of growth prospects in European markets

2. Companies in the sub-sectors have the scale to export into European markets

3. Exploitation of natural resources or technical experience is achievable

4. Clear regulatory drivers exist with high levels of enforcement

5. Emerging technologies and product development are attracting VC investments


Table 7.1 Environmental Goods and Services with the Greatest Potential

Sub-sector Growth

Potential -

Island

Sectoral

capability/cap

acity

Export

Potential

Product and Service Potential Comment

Construction HIGH LOW HIGH Windows

Insulation

Heat pumps

Ventilation

Solar panels

Cladding

CHP

Facades

Installation services

Export potential predicated on the construction industry gearing up to build

and deliver BER energy efficient housing. If domestic production of key

components sourced within Ireland, there may be export opportunities as

buildings across Europe will have to comply with the strictest energy efficiency

targets by 2020. Unless indigenous manufacture develops, imports will

dominate in the short term. Therefore growing the domestic market will be the

springboard for securing market share in the UK initially and other EU markets

subsequently.

Clean Technology HIGH MEDIUM/LOW MEDIUM/

HIGH

RES - E consultancy Other

consultancy

Energy management consultancy

Resource efficiency

Water efficiency

Energy efficiency and renewable

energy sources

Training, export potential in

particular

This is cross sectoral and will be mainly focused on the energy sub-sectors.

Again the development of the indigenous sector to develop capacity and scale

should be a priority and export potential will only follow if this happens. This is

a knowledge intensive category therefore R&D and training should be

prioritised to develop the sector.

Consultancy MEDIUM HIGH LOW/MEDIUM Climate change

RES

Carbon footprinting

Supply Chain analysis

Sustainability reporting

RES project scoping and design

Again this is a cross sectoral opportunity, with the highest potential in the area

of climate change, renewables and energy efficiency. Ability to export will

depend on the mandate given to Irish subsidiaries, the exploitation of market

intelligence and the scale and ambition of the indigenous EGS consultancy

industry.

Monitoring MEDIUM MEDIUM/

HIGH

MEDIUM/

HIGH

Aquatic remote sensing The WFD and R&D will remain the key drivers. Critical success factors include

commercialisation of R&D effort, deployment of emerging technologies and

very strict enforcement. Widespread application of key technologies in the Irish

market is a key first step to building export potential.


214

Energy

Management

HIGH MEDIUM MEDIUM Building Energy Management

Systems

Smart meters/grids

Auditing and demand side

management

High energy costs will drive investment across Europe in improved monitoring

and management of energy use in buildings. Products with best prospects are

intelligent building management systems. ESCO – energy service companies

that supply and manage energy use to optimum efficiency a specific growth

area.

RES HIGH LOW HIGH Wave

Tidal

Ocean

Solar

Wind

Biomass

Biofuels

EU RES-E targets are the key driver. Low base with high growth potential.

Ireland has comparative natural resource advantages that should be exploited.

Critical that scale achieved in the short term. Major investors should form

linkages and strategic partnerships with sub-suppliers. This is the one EGS

sector that requires a quantum improvement in the level of funding to support

RD&D. This is also a sector where FDI activity should be proactively sought at

all levels in the supply chain.

Waste HIGH MEDIUM LOW MBT

Analysis services of recyclates

Anaerobic digestion

Recycling treatment facilities

Gasification/LPG

Waste should be seen as a resource. The majority of opportunities in this

sector will be domestic. Priorities should be to exploit the recovery and

treatment of current waste streams with a view to capturing their value added.

Key opportunities driven by climate agenda include biomass and biofuels from

waste. Clear government policy a critical success factor for future investment.

Water HIGH MEDIUM HIGH Membrane processes for

purification

Packaged Design Build Operate

WWTPs

Household scale treatment plants

The majority of opportunities in this sector will be domestic. Significant

commitment in NDP and Investment Strategy for NI and green procurement

practices should be used to leverage capacity to deploy new technologies.


In summary, this analysis suggests that companies have the greatest prospects (and

therefore export market potential), provided framework conditions described elsewhere are

favourable, to expand in the following areas:

o Building materials and components to be used in the retro-fitting of the existing building

stock to rising BER standards and in the construction of new energy efficient buildings.

o Engineering services in the RES-E sector, in particular the construction of connections

and the installation of RES-E units.

o Environmental consultancy services, in particular in relation to climate change, energy

management and RES-E project development.

o Water and waste water, driven by the proposed public works programme.

o Clean technologies, in particular energy efficiency services and products.

As the vast majority of EGS companies are satisfying demand on the island, it will take a

major effort over several years to grow exports. On the other hand, the task of growing

exports should be greatly facilitated as the UK - Ireland largest export market – expects the

EGS sector to grow by nearly 100% to £46 billion by 2015. With an adjacent, large, growing

and dynamic market, this suggests that the priority should be to secure an ambitious market

share of the UK overall EGS market as a first step for potential Irish exporters.

Where business opportunities are identified in the domestic market initially, this will enable

companies to develop and expand capabilities and expertise to test products and services

which may provide the launch pad for exports.

A best estimate suggest that the value of the EGS sector in Ireland is in the region of €4.3 to

€5.2 billion. It is therefore, comparable in size to the sector in many other of the more

developed Member States. While statistical data deficiencies mitigate against a precise

quantification of the sector’s KPIs, this research clearly demonstrates that the sector has

enormous potential.

Environmental policy, in particular the climate change agenda, has been, and is expected to

continue to be of critical importance in influencing the future direction of the overall EGS

sector. For this reason, it is important that Governments, both North and South, provide

and articulate a clear and consistent strategic policy framework as regards how best the EGS

sector will be developed. This is an essential pre-condition in order to provide certainty and

confidence in the long term prospects for the EGS sector to stimulate investment in the

provision of new goods and services.

As highlighted in stakeholder consultation (and consistent with findings of studies in other

jurisdictions), clear and consistent policy direction can help to reduce the risk associated

with the development of new products and services. “Risk can be reduced and some market

failures overcome by creating a robust, long-term framework that gives business the time

and confidence to invest in finding new solutions to environmental goals”.313

313 Ibid.


216

It is evident that the regulatory framework has been the most important driver of growth for

virtually all EGS sectors to date. While other factors are also now coming into play in some

sectors (e.g. climate change and energy pricing), there is no doubt that regulation will

continue to play an extremely important role going forward.

Governments need to raise the bar by designating the EGS sector as a priority industry on

par with Life Sciences and the ICT sectors. The report’s evidence suggests that a strategic

policy framework that drives investment; that facilitates enterprise in environmental

markets and exploits new business opportunities needs to be prepared. Top level

engagement between the EGS sector and the state agencies tasked to support enterprise is

a pre-condition if the ambitions articulated in this report are to have a prospect of success.

Initially through the UK, Ireland’s main export market, companies in the EGS space - whether

or not they are Irish owned - need to harness the market dynamics that are evident in

priority EGS sub-sectors and to build a sector that will position the island as a major player in

niche environmental goods and services.

Setting credible targets; seeking to exploit a comparative advantage; re-focusing state

supports; and by articulating a strategic intent to become a player in the global EGS market

will set the right framework conditions essential to secure FDI; to unlock investment; to raise

the level of RD&D; and to convince Ireland’s entrepreneurs that the EGS sector is a growth

area of the future.

A word of caution is needed by way of final comment. Many of Ireland’s EGS sub-sectors are

playing catch-up and as a consequence the proposed strategic framework needs to be

realistic. Despite having a potential comparative advantage in niche areas, Ireland does not

have first mover advantage in respect of any EGS technology (apart perhaps from wave and

tidal). Furthermore, there are no major indigenous players of scale in the private sector

that, for the present at least, could challenge on the global market. Finally, as the EGS sector

was not a government priority until recently, FDI activity, R&D investment and eco-

innovation levels are well below what exists in competitor economies.

Despite these weaknesses, the EGS sector is on a strong growth path – worldwide sales of

$700 billion are forecast for 2010 - so the challenge is the transform the sector into a key

driver of new economic activity on the island.

To achieve this ambition, governments will need to convince suppliers and manufacturers of

environmental goods and services that Ireland/Northern Ireland has adopted and is

implementing a coherent, clear, coordinated and well-resourced strategic policy framework

that will position the EGS sector as a new driving force for the economic development of the

island economy.


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LIST OF ABBREVIATIONS

AD: Anaerobic Digestion

AIC: Accredited Inspection Contractor

BAT: Best Available Technologies

BEMS: Building Energy Management System

BER: Building Energy Rating

BERR: UK Department for Business, Enterprise and Regulatory Reform

BFR: Brominated Flame Retardants

BREW: Business Resource Efficiency and Waste Programme

CCS: Carbon Dioxide Capture and Storage

CD: Construction and Demolition

CEMEP: Commission on Environmental Markets and Economic Performance

CER: Commission for Energy Regulation

CFL: Compact Fluorescent Lamp

CGPP: Cleaner, Greener Production Programme

CHP: Combined Heat and Power

CIF: Construction Industry Federation

CO2: Carbon Dioxide

COFORD: National Council for Forest Research and Development

CSR: Corporate Social Responsibility

CTP: Cleaner Technologies and Processes

DAF: Department of Agriculture and Food

DBO: Design, Build and Operate

DCMNR: Department of Communications, Marine and Natural Resources

DEFRA: UK Department for the Environment, Food and Rural Affairs.

DEHLG: Department of Environment, Heritage and Local Government

DETE: Department of Enterprise, Trade and Employment

DJSI: Dow Jones Sustainability Index

EGS: Environmental Goods and Services

EIA: Environmental Impact Assessment

EIAG: UK Environmental Innovations Advisory Group

ELV: Emission Limit Values

ELV: End of Life Vehicle

EMEA: Europe, Middle East and Asia

EMS: Environmental Management System

EMSA: European Maritime Safety Agency

ENDS: Environmental Data Service

EOR: Enhanced Oil Recovery

EPA: Environmental Protection Agency

EREC: European Renewable Energy Council

ESCO: Energy Service Company

ESP: Environmentally Superior Products

ETAP: Environmental Technology Action Programme


218

ETS: Emissions Trading Scheme

FCP: UK Government Forward Commitment Procurement Process

FDI: Foreign Direct Investment

FGD: Flue Gas De-sulpharisation

GBI: Green Business Initiative

GDP: Gross Domestic Product

GHG: Green House Gas

GNP: Gross National Product

GPP: Green Public Procurement

HVAC: Heating, Ventilation and Air Conditioning

ICT: Information, Communication and Technology

IEA: International Energy Agency

IHBA: Irish House Builders Association

IP: Intellectual Property

IPPC: Integrated Pollution Prevention and Control

ISEQ: Irish Stock Exchange

IVCA: Irish Venture Capital Association

IWMA: Irish Waste Management Association

KTNs: Knowledge Transfer Networks

LAPD: Local Authority Prevention Demonstration

LMI: Lead Market Initiative

MAP: Management Action Plan

M&A: Mergers and Acquisitions

MDG: Market Development Group

MPC: Marine Pollution Control

MSW: Municipal Solid Waste

MW: Mega Watts

NACE: Statistical Classification of Economic Activities

NAP: National Allocation Plan

NDP: National Development Plan

NIAER: Northern Ireland Authority for Energy Regulation

NISP: National Industrial Symbiosis Programme

NOx: Nitrogen Oxide

NRA: National Roads Authority

NSAI: National Standards Authority of Ireland

NWPP: National Waste Prevention Programme

OEM: Original Equipment Manufacturer

PV: Photovoltaic

REACH: Registration, Evaluation, Authorisation of Chemical Substances Directive

RES: Renewal Energy Supply

RMI: Repair, Maintenance and Improvement

RoHS: Reduction of Hazardous Substances Directive

S&P: Standard and Poor

SEA: Strategic Environmental Assessment

SEAPT: Shannon Estuary Anti Pollution Team


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SEI: Sustainable Energy Ireland

SET-PLAN: EU Strategic Energy Technology Plan

SEWG: Sustainable Energy Working Group

SFD: Soil Framework Directive

SFI: Science Foundation of Ireland

SO2: Sulphur Dioxide

SSD: Sewage Sludge Directive

STRIVE: Science, Technology, Research and Innovation Programme

TPER: Total Primary Energy Requirement

VC: Venture Capital

VOC: Volatile Organic Compounds

WBCSD: World Business Council for Sustainable Development

WEEE: Waste Electronic and Electrical Equipment

WFD: Water Framework Directive

WRAP: Waste and Resource Action Programme

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